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As Benjamin Franklin wrote in his Autobiography:
In reality there is perhaps no one of our natural Passions so hard to subdue as Pride. Disguise it, struggle with it, beat it down, stifle it, mortify it as much as one pleases, it is still alive, and will every now and then peep out and show itself.... For even if I could conceive that I had compleatly overcome it, I should probably be proud of my Humility.
I've come to believe that a declaration of humility is one of the surest signs of arrogance.
Over the years I've met many professional investors who talked incessantly about how humble they were, or how the market kept them humble.
None of them, so far as I can tell, are still in the business.
If humility always seems to escape those who try to reach it, how should we think about approaching it?
Three ideas that might help.
👉 One, exemplified by reader J. Robert Ross, is evaluating yourself without illusions:
I'm not all that smart. I'm not a great investor. My return for the past three years barely kept pace with the market. Obviously, I am a boring, average-to-below-average, mediocre investor. Why wouldn't I be humble?
I have little doubt that Mr. Ross's "boring" portfolio and his conviction that he is "mediocre" will keep him from taking excessive risks and overreacting when markets go haywire. He will end up with bragging rights over people who thought of themselves as much smarter, but he doesn't sound like a guy who would even take pride in that.
👉 Two, the more you learn, the more you should realize how little you know. Instead of patting yourself on the back for how much you have come to understand, you should kick yourself over how much you still have left to learn.
At age 85, the economist, portfolio manager and financial historian Peter Bernstein told me:
After 50 years in the investment business I still haven’t got it all clear. And that’s okay, because I understand that I haven’t got it figured out. In a hundred years, I won’t have it all figured out.
Again and again until he died at age 90, Bernstein questioned his own beliefs, repeatedly tackling the same topic and drawing different conclusions — and taking on new topics from scratch. Constantly asking questions kept him from thinking he'd ever found — or ever would find — all the answers.
👉 Three, your luck is bigger than you are.
In 2003, I asked Warren Buffett whether he thought of himself as a genius. He didn't blush and say, "Aw, shucks," or bluster and say, "No, of course not." Instead he said simply that he thought of himself as having been given, at birth, a winning ticket in what he calls "the ovarian lottery." Had he been born in a different time or place — not in Omaha in 1930, but rather Omaha in 1830, or Ouagadougou in 1930 — he never would have been able to put his skills to as much advantage.
I'm pretty sure Mr. Buffett is aware that he is smarter than most other investors. I'm also pretty sure he keeps that awareness from poisoning his judgment by reminding himself that his success is a fluke of time and place.
Most people think humility is about managing what others think of you, which would be easy. Instead, it's about being honest with yourself, which is hard.
How do you try to keep yourself humble as an investor?
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