7

CHAPTER

Have the Discipline to Say No

THE FOURTH ELEMENT

The intelligent investor is likely to need considerable willpower to

keep from following the crowd.

— Benjamin Graham

Arming yourself with a sound investment philosophy and

search strategy puts you on the path to selecting businesses suitable

for investment. Once a business is valued, the most diffi cult deter-

minants of whether to invest or not come into play. Unlike valua-

tion, which primarily relies on quantitative measures, investors now

must rely on qualitative factors:

• Having the discipline to say no


• Being patient


• Having the courage to make a significant investment at a
  maximum point of pessimism

These factors are exceedingly important because the probability of

suffering investment loss is signifi cantly higher due to the emotional

underpinnings of these factors. Consider the next fi ctitious example.

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