What kind of investor are you? Last year,
First, let's recap what the Myers-Briggs classification says. It attempts to slot people's strengths and weaknesses into four main categories: Extrovert/introvert, intuition-oriented/data-oriented, thinker/feeler, decision maker/intellectual.
All in all, there are 16 types. Within each there is, of course, a rich gamut of other qualities, such as courage, intelligence, creativity, etc., all of which matter greatly. Also within each type are degrees of dominance of each trait. But even the 16 general types can help you get a quick estimation of a person's main character traits - either others' or your own.
How can you use it to invest better? First, take a quick test online to see what your MB type is. A number of free tests are available on the web, and here's one that provides a quick, simple version of the test.
After finding out what you're likely to do better and what less well, simply do more of the first and avoid doing the second. Then, team up with someone who can compensate for your weaknesses.
For example, the decision making/intellectual pursuit category determines whether your strength is making decisions or playing with ideas. Both are useful: You need decisiveness to stop analyzing and to buy or sell, but you also need to think and analyze before you act.
At the extreme, though, too much of either can cost you. For example, if you are a very strong decision maker, an executive type, you may buy and sell more often than you need to, just for the fun of the action, even at the expense of performance.
On the other extreme, if you have too much intellectual pursuit in you, you may prefer to use investing as an academic study rather than for making money. At the extreme, such investors are more like investment scientists, who prefer back-testing and playing with simulations, to actually reaping profits.
Therefore, if you are a strong decision maker, team up with the opposite type, and vice versa. George Soros, for example, a talented trader, once teamed up with Jim Rogers, a strong analyst. In their heyday, their Quantum Fund had one of the best track records ever.
Now for the intuition-oriented/data-oriented categories. Here, too much intuition may lead you to avoid detailed analysis and look for beautiful patterns instead - even when these may not mean much. Thus, the intuitively strong often look at charts as the ancient Greeks used to look at clouds, as signs from the market gods, or seek "market forecasting formulas," instead of doing research stock by stock.
Of course you need some intuition, to grasp the pattern behind your researched data, but too much imagination in investing may lead you astray. On the other hand, if you are strictly data-oriented without any intuition, you may invest only by analyzing financials and browsing the Internet, but not see any value in actually talking to management. You need to do both.
What of the thinking/feeling analysis? This examines how you react to events. Good investors are often more thinkers than feelers. The second may be better at getting people-related information, but in dealing with investments, thinking is better than feeling. Indeed, the thinking types often end up taking the money of the feeling types at market turning points. So if you are a strong feeler, team up with a cold-blooded partner who can keep you from getting too emotional.
Finally, extroversion/introversion would determine if you prefer to invest alone, or in a group. You can be either type and still succeed in investing, so long as you at least have strong decision-making ability. But if you're both an introvert and an intellectual, you should either be an analyst or look for partners who force you to decide.
All in all, in investing as in war and sports, success comes from playing to your advantages and avoiding playing to your weaknesses. To do this, you must first squarely face both.
Avner Mandelman is a former director of Venator Capital Management and author of The Sleuth Investor. Amandelman@venator.ca