Why Investor Behavior Never Changes

“Buy, buy, buy.”

Darius Foroux
4 min readSep 18, 2022

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To be a good investor, you need a deep understanding of human psychology and behavior.

The first time I heard about that was when a friend told me to read Poor Charlie’s Almanack in 2015. It’s a book about the investing style of Charlie Munger.

So I bought the book, started reading it, and thought, “What does this have to do with investing?”

I found it very insightful, but at the time I didn’t grasp why the book was mostly about investor behavior.

You’ll find a lot of ideas about what not to do as an investor. You’ll learn about the most common mistakes. But you won’t get a step-by-step program for investing in stocks like Charlie Munger or Warren Buffett.

Since then, I’ve learned that investing is mostly a matter of a deep understanding of human behavior. Just reading a few mainstream books on psychology isn’t enough.

It takes years to learn enough about human behavior to apply it to investing. For me, this understanding only started to come in the past two years.

I must say I’m not the quickest learner or particularly gifted. I was average at best during my educational career. And I learn slowly.

But I’ve been casually learning about investing since 2007, and very seriously (reading one or two books a week) since 2015. Many years, hundreds of books, and thousands of conversations about investing later, I finally understand why Munger emphasizes the importance of understanding human behavior.

This sound obvious when I say it in my head right now.

The stock market consists of human participants. What happens in the stock market in the short-term and long-term is a result of the behavior of the participants.

That doesn’t mean there’s no skill involved with investing in the stock market. It’s simply not the determining factor. A person with perfect knowledge of evaluating stocks will not build wealth without understanding human behavior.

Human behavior never changes, hence, investor behavior never changes

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Darius Foroux

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