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The 7 necessary traits of successful investors

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

The Brent oil price, followed by fewer North American investors, is at an important technical level as it challenges its 200-day moving average. I'm not normally a big fan of using technical analysis on commodity prices or stocks, but when sentiment is this elevated, technicals tend to be a more important driver of price moves.

Elsewhere in oil news, producers remain optimistic about the mid-term profit outlook according to a survey by Goldman Sachs,

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"'There is one clear message from the 1,000 plus pages of fourth quarter transcripts: that most CEOs believe that the worst is over, and the time for growth is now,' the team writes. 'While some management teams expressed more caution than others, the industry as a whole is retooling,' they said, adding that they estimate 85 per cent of the companies that they cover are planning to increase capital expenditures in 2017, a sign that they believe they'll need to increase production soon."

"Oil Executives Are Confident That the Future Is Bright" – Verhage, Bloomberg
See also: "Oil prices drop as hedge funds head for the exit: Kemp" – Reuters
"Drilling Boom in Hottest U.S. Oil Play Is Bad News for Gas Bulls" – Bloomberg
"@Ole_S_Hansen Brent crude #oil testing its 200-day MA at $50.78." – Twitter
"New oil price slump beckons, says Harvard's Maugeri" – Financial Times

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I have previously, only half jokingly, called global military and defence stocks a "put option on humankind," and I'm considering adding the video gaming and virtual reality sectors to this list, even if it looks like a good long-term investment. The Economists' Ryan Avent details how a large number of young, developed market males are dropping out of the work force to spend more time with video games.

This sounds like a joke, but there are numerous economic causes and effects of the trend which is far more wide-reaching than more suspect. Video games, through developments in virtual reality technology will get more and more psychologically attractive over time.

"Escape to another world" – Avent, The Economist

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Famed investor and author Jim O'Shaughnessy wrote a column outlining the seven traits of successful investors. These include a longer term focus, valuing investment process over outcome, ignoring forecasts and predictions, patience, "strong mental attitude," probabilistic thinking and discipline. I can quibble with a few of these – billionaire manager Richard Driehaus uses a momentum strategy with a time horizon often measured in minutes -  but the section on probabilities stood out,

"According to Richard Peterson's Inside the Investor's Brain, 'When an outcome is possible but not probable, people tend to overestimate its chances of occurring. This is called the possibility effect … Emotions in uncertain or risky situations are more sensitive to the possibility rather than the probability of strong consequences, contributing to the overweighting of very small probabilities.'"

"Seven Traits that I Believe are Required for Active Investors to Win in the Long Term" – Yahoo!

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Tweet of the Day: "@FTMarkets Junk bonds' stellar run under threat from a hawkish Fed on.ft.com/2nyxANI " – Twitter

Diversion: "To spot a liar, look at their hands" – Quartz

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More

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