The good thing about investing is that you don’t have to be the smartest person in the room to succeed. Common sense and rationality can make an investor successful. It can also help to learn from other smart investors.
The best investors are not necessarily the ones who over-complicate the process with complex formulas and predictions. Those who stick to tried and true share selection criteria and follow a few basics of good investing will often perform well in the long run. Test your investment hypothesis each time you go to buy a share – can you present it in a practical and common-sense way?
People who invest their own money tend to learn much more quickly than people who are only investing other people’s money. People who invest their own money are more likely to enjoy investing and be genuinely curious about the shares in which they are invested. They also have actual skin in the game which gives an added incentive to monitor their portfolio’s performance.
It is often a sign of a smart investor if they can explain why they invested in a particular security to you in a logical manner. Overuse of investment acronyms without context or explanation can be a sign of someone with lots of training but little intuitive understanding. Good returns over a long period of time is a good indicator the investor has experience and knows what they are doing. When it boils down to it, getting good returns over a long period is the point of investing.
That is not to say you should follow smart investors blindly, as no investor is perfect. Like everyone else they have biases and industries they may tend to favor. Or there may be some other aspect of their process you may not agree with. You should read their advice/opinions, form your own opinion and trade if you agree or not trade if you don’t or as is often a good idea – just wait.