Emotional Control Is the Most Important Factor in Successful Investing

Many active investors buy stocks on the hope of scoring outsize returns by purchasing the next Apple or Tesla. They also might remember eras such as the dot-com bubble or the housing boom and assume that investing is a path to easy money.

However, in truth, even most money managers underperform the S&P 500 index. One reason Warren Buffett has become so respected is his track record of beating the index year after year.

Yes, Buffett knows how to read balance sheets and cash flow statements. He can also determine a bargain when he sees it. Nonetheless, he has shown the patience to buy when stocks fall to their lows and the discipline to hold companies he supports, even if the market does not believe in those companies for a time. For all the focus on undiscovered bargains or earnings beats, the most crucial factor in successful asset allocation may actually be emotional discipline.