What if I told you a crucial key to your investing success is something you never expected?
It's not a breakthrough stock-picking formula.
It's not a special brokerage account.
It's not a cutting-edge tax shelter.
It's your personality type. Now, bear with me: I'm not talking about astrology, newspaper horoscopes, or those scammy online tests. Those are for entertainment, not insight. I'm talking about the Myers-Briggs Type Indicator®, a tested psychological instrument used by Fortune 500 companies to identify the strengths and weaknesses of their employees.
As many as two million Myers-Briggs assessments are administered each year, making it the world's most widely used personality assessment. Think about that: huge companies with the resources to use any test (or create a better one) use this one year after year.
The result of a Myers-Briggs® assessment is one of 16 four-letter “personality scores” (for instance, “INTJ” or “ESFP”) followed by a detailed explanation of your score.
What Does the Myers-Briggs Assessment Measure (and Why Does it Matter for Investing)?
You might be wondering what your personality type has to do with investing in the first place. Don't you just need the right tools?
To a point, yes. But we all know investors who get wildly different results from the same tools. At some point, personal factors (like your score) begin to matter far more than the nuts and bolts of your portfolio.
This is where the Myers-Briggs assessment comes in. Your four-letter personality score captures your preferences in the following areas:
- Introversion vs. Extroversion: Are you a lone wolf or a social butterfly?
- Sensing vs. INtuition: Do you focus on here and now or search for new possibilities?
- Thinking vs. Feeling: Do you make decisions with logic or emotion?
- Judging vs. Perceiving: Do you like to settle things or go with the flow?
The first reaction some people (usually perceivers) have to seeing themselves scored this way is “but I do all of these things at different times!” And that's true: no one is always introverted, or never feels emotion. Nor is this what an “I” or a “T” in your Myers-Briggs assessment score is trying to say. Rather, your score is measuring your natural preferences in these areas. We all have them, yet many of us deny them.
Denial is not smart.
If you have spent any time investing, the implications of the Myers-Briggs assessment should be starting to present themselves. It should be obvious that certain types are natural fits for technical analysis (for example, NTs, the intuitive thinkers) while others (such as SJs, the sensing judgers) are better served by safe/proven vehicles like index funds.
Again: I'm not saying a type can never succeed outside of their naturally-suited investment strategies, only that their biggest and most sustainable success will probably not occur there.
Your Type Matters More Than You Think
Too many investors let the voices of media talking heads or their differently-typed friends lead them away from the approach they are best matched for.
In this series, I am going to profile each of the four personality-type “clusters” and their unique outlook on risk, investment, and profit. I'm not a psychologist (and I don't play one on TV) but the great thing about the Myers-Briggs assessment is that you can draw useful insights without a master's degree. And the 80% solution is better than none at all.
The four clusters to be profiled — and their constituent personality scores — are:
The “SJ” Traditionalists
The “SP” Experiencers
The “NT” Conceptualizers
The “NF” Idealists
In the meantime, click here [Editor's Note: link broken] for an affordable, professionally administered, scientifically valid Myers-Briggs assessment you can take to learn your score. I have no affiliation with this company other than knowing they develop and score tests for many organizations. If you prefer, you can search for a non-scientific (but free) online test. The 80% solution is better than none!
Stay tuned for next week's profile of the “SJ” Traditionalists and get ready to examine your own emotional/psychological investing outlook in more detail than ever before!
What's your Myers-Briggs personality type and how do you think it has influenced your investing?