Invest 5.0: Personality!

Do you realise that your personality type is critical to your initial and ongoing capacity to invest? It’s so close to home, yet it’s one thing we overlook (or choose to). 

Maybe I should distinguish between personality and temperament

What we all see is your personality: it’s the face you put on. But your temperament is what you are underneath.  

I first learned this in the book Personality Plus by Florence Littauer – a delightful author whom I actually met at a seminar 30 years ago. Reading it made me realise how important it was to understand our inner selves, as she writes: 

“Know what what we’re made of
know why we react as we do
Know our weaknesses and how to overcome them.”
1

This jazzy, fun chart compares the 4 temperaments we apparently have: 

Similar to the chart, Littauer says: 

  • The sanguine’s “optimistic, cheerful and bubbling”
  • The melancholic’s “analytical, detailed, perfectionist”
  • The choleric’s “adventurous, confident, productive”
  • The phlegmatic’s “patient, obliging, consistent, laid back”.2

Decide which temperament you are – but you could be a mixture of them! 

Littauer also gives us a very thorough checklist of strengths and weaknesses to determine our dominant and less dominant personality traits. Please get her book if you can (it’s had numerous reprints). 

So it’s quite clear that by understanding ourselves, we learn to understand others – so important in business and personal relationships. But it’s especially important in INVESTING, where your temperament is key to your ability to make right decisions.

TIP:  Want to be successful? Work on your weaknesses and enhance your strengths!

My dear Dad, in his innocence, knew this. He matched stock recommendations with what he called his clients’ “moods”. Here’s one example.

A wealthy, well-known lady – we’ll call her ‘Patsy Leow’ – used to frequent the Singapore Turf Club in the old days. She loved picking ‘outsiders’3 – but most of her money went on horses with short odds, or ‘favourites’.

Gorgeous Madam ‘X’ is a dead-ringer Patsy Leow! 

 When Madam Leow asked Dad for his share tips, he chose those “that will never go down” – solid companies with increasing yearly profits and paying healthy dividends. He also told her of 2 or 3 shares he liked that were “cheap now but had lots of potential to go up in price”. Her eyes lit up and she said, “Yes, Alex, we’ll put a few thousand on those!” 

Such speculative stocks kept Madam Leow interested: she liked the challenge and excitement in picking a winner that would eventually pay well, and she came back for more. 

So for all you optimistic choleric and sanguine risk-takers – who enjoy a good punt and love to talk about your wins, ‘speckies’ have great appeal, and you’ll likely go this way. 

But worrying melancholics and laid-back phlegmatics amongst you should invest conservatively, limit borrowings and stick to topping up superannuation, investing in property, managed funds, and ETFs or LICs (see Invest 3.0). Such options will suit you perfectly without the compulsive need to check your stocks several times a day!  

In the past, worriers bought “solid” shares which they could “lock up and keep for their children”. It worked well 20 years ago, especially for the banks, but not now. 

I also recall a manager of the Hongkong and Shanghai Bank  pointing to me when I was 8 and saying to Dad: “If you love your daughter, buy her HSBC shares!” My father did more than that – he also bought shares in Standard Chartered Bank, and told his clients to do the same.

TIP:  Banks are no longer stockmarket darlings. ‘Fin-techs’ – a common, current term – relate to digital financial products like ‘Blockchain’. This is looming to weaken dominance of the Australian ‘Big 4’. It’s time to look for other dividend-paying stocks with growth potential.

My personality, my formula

My personality without a doubt influences the shares I buy. But it’s a little more complex. I believe I’m mainly sanguine with a little of the choleric, melancholic and phlegmatic thrown in.  

I love excitement. I’m a risk-taker. I love the unexpected. But at the same time, I’ve learned to be patient and cautious. 

My strategy over the last 40 years was to slowly build my portfolio up to about 30 stocks, and sometimes more. This roughly comprises: 

  • 50% per the ‘IPD’ formula (see Invest 1.0) that tick boxes of income, profit and dividends
  • 30% into ‘growth’ stocks with healthy revenue (ie. income before expenses), but haven’t yet made a profit (ie. income after expenses) 
  • 20% in reserve for stocks with ‘potential’ – but I don’t invest more than $1000 on those. While no-one wants them today, I’m thinking long-term for up to 3 years. 

My advice

  1. Don’t get caught by the FOMO (Fear Of Missing Out) – it’s dangerous!
  1. Assess how much you can invest. Never, never, never over-borrow to buy shares. When the market dives, you’ll still sleep well. The good news is markets always recover. If you’ve invested wisely, your money’s safe. People who’ve told me, “I’ll never buy shares again!”, are those who were bitten by the FOMO bug. They lost their money, their pride, but worse, missed opportunities yet to come.

TIP:  Be patient. There will ALWAYS be a good time to buy. Keep saving and make sure you’re mentally, physically and financially ready to ride the next wave. Happiness isn’t having money, but peace of mind and sleeping well at night.

What should you invest in?

  1. For those about to retire, my best advice is to top-up your superannuation to the max while you’re still working. If you want to have a go and have a spare $1–5K, get Telstra (TLS) and another newish Telco I’ve heard good things about: Aussie Broadband (ABB). TLS has a decent and fully franked dividend. (I hold parcels of Telstra and BDA, I’m watching ABB and may buy soon.)
  1. Want some fun? There are 2 (shock, horror) marijuana stocks you could pick: BOD Australia (BDA) and Althea Group Holdings Limited (AGH). Prices as of 5 July 2021 are 0.37 cents and 0.35 cents respectively. I believe you’ve a fair chance of making a profit in a year. I hold parcels in both shares.
  1. If you’re not ready to start an online trading account, the ASX website is excellent. You can create your watchlist and monitor and research stocks. It also runs several  information sessions throughout the year. 
  1. Worriers should go for managed funds or ASX-listed investment companies (LICs). I’ll give you the ASX codes for some LICs and leave you to research them. Pick 1 or 2 and don’t look at their prices for a few years:

      AFI
      ARG
    –  WAM
    –  WGB
    –  WMI.

You can see that I find all this very thrilling and engaging – I hope you also do by now! That risk element is the motivation we all need to keep us researching, observing and asking questions

I’ll share my vision for the future with you in Invest 6.0.

 1 Littauer, F. (1992). Personality Plus, p.12. Grand Rapids, Michigan: Baker Book House Company.

 2 Littauer, p.19.

 3 What we call ‘long shots’ or ‘roughies’ – ie. horses unlikely to win.

 4 Stockbroker-speak for companies presently sitting in a corner waiting for someone to ask them to dance. Will they eventually take to the dance floor? In my experience, even when only 1 or 2 of them did, I more than made up for those that packed up and left!

8 thoughts on “Invest 5.0: Personality!

  1. Efrem Manassey

    Hey Shirl,
    Love your cameo of the Four Humors as it harks back to the dawn of European civilization; specifically medicine.

    This philosophy comes from Hippocrates (Greece, circa 450BCE) who is considered to be the father of medical science.

    As you say, the Four Humors stand for the four elements; earth, water, air & fire. Also the four states; hot, cold, wet & dry as well as the four seasons….

    You know, the four humors are regarded as primal and archetypal as fire and heat or water and cold. They really do tap into basic personality types and their combinations that arise in human nature.

    Yes, you can use them to sell anything. Or you can consciously work on your nature to rise above them to a great degree. One can balance out one’s difficult traits. A depressive outlook can, in time, be transformed into an optimistic one.

    Loved your use of this principle, Shirl. And I love that you share your life long knowledge of investing with all of us.

    • I respect so much your wealth of knowledge and thank you for writing on the 4 humors – my high school days in Singapore covered at least 4 Shakespearean plays – saw the words ‘choleric’ and ‘melancholic’ but didn’t quite know what they meant. When we understand ourselves and others it would make our lives so much easier! If only we were taught this in school.

  2. Richard Trent

    I was aware of these temperament types had not considered them within the context of investing. Thank you.

    • Appreciate your comments Richard. Temperaments are important for successful investing. It helps if you have a like-minded
      partner. If you are impulsive and they are logical, it is a good balance – as long as you appreciate each other’s strengths and not be critical of their weaknesses.
      My dad had a ‘gang’ of share-market tragics who would come to our home often. I loved listening to their conversations. They argued, disagreed, talked over each other but by the end of the evening, go home smiling, having finally decided on what shares to buy the next day. The sanguines, phlegmatics, cholerics and melancholics each brought their gifts as they had one thing in common – to make enough money to provide for their families. And they did.

  3. Keren

    Hi shirl. I love the way you seamlessly integrate topics. I was curious as to what you would tackle after investing! I still feel overwhelmed by all the info about the stock market.

    • Thanks Keren! Credit to my editor for doing such a great job with our topics. I know it is a challenge trying to understand the stock market. I was literally born with it – it’s second nature to me and so much a part of my life. We decided to do this series on Investing with the purpose of helping people like yourself. Like it or not we are ALL investors in the stock market because we ALL have a retirement fund. The reports we are sent every year tells how our funds have performed investing in shares, property, cash etc.
      This is YOUR money – you have worked hard for it – and it pains me to know that most of you will just glance through the pages and figures without understanding what they all mean.
      In next weeks’ Investing 6.0 – the final one on this subject – I will guide you through this stock-market maze and hopefully remove that feeling of being overwhelmed. Passive or active investor you still need to know.

  4. rosblatt

    Hi Shirley, Again very interesting, unfortunately although I just might have the personality (???) it’s much too late to invest. The Blog is most helpful to those who can.

    • You indeed have the personality Ros .. and although it may be too late for you to invest, it may be just the right time for
      someone else – and if you happen to meet them, please pass this on. In the meantime … if you do happen to have a spare $500 … I may just have the right share for you!

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