Providing reliable financial advice often depends on extensive experience, intuition and discipline. Take, for example, Warren Buffett and his time-honored approach to value creation. While its overall strategy is the result of years of refinement, finance's core principles and values consist of ideas and formulas used by everyone in the financial sector. How, then, has Buffett been so successful in value investing when so many others using the same tools have failed? The answer is very simple: discipline. In this hyper-connected era, advisors can access the information used by high-profile investors like Buffett and hopefully apply the same tools to achieve similar results. But people's myopia, combined with our frequent inability to ignore emotional influences, can keep us from sticking to a goal for an extended period of time. Sometimes this means we make bad moves in the short term that have aggravating consequences in the long term.
It takes unwavering discipline to follow these time-honored strategies for long-term success. Following frameworks like Buffett's doesn't guarantee success, but it does increase its likelihood, especially if applied over time. Behavioral economics can explain how many investors fail to follow the path of success even with the right tools and methodology. Investors often let emotions and preconceptions control their decisions, sometimes leading to disastrous failures. Emotions in the market are running high today. Advisors should be aware of these biases and be open to innovative investment strategies to combat them. .