The 10 habits of highly effective investors: Part 2
Habits 4 to 6 — Knowing: Get facts, seek opinions, test your thinking.
CIBC Investor’s EdgeJun. 15, 2026
5-minute read
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We've set out this guide in three articles, each covering three habits:
Governing: This is the big picture of how you invest — managing investments based on your plan, thinking about risk and how each investment affects your overall portfolio.
Knowing: This is the detective work of investing — gathering facts and opinions about an investment and testing your thinking about how an investment could perform.
Framing: This is looking beyond numbers on a screen — applying knowledge from probability, psychology and history to make better decisions.
The final habit, Improving, brings everything together into a larger habit of how you operate as an investor.
In this article, part 2 of 3, we discuss Knowing.
Knowing
Knowing is the detective work of investing — gathering facts and opinions about an investment and testing your thinking about how an investment could perform.
Get facts
The first habit of Knowing is to get the facts. It's surprising how easily investors can invest without getting the facts of the matter, say because a friend has mentioned an investment or they've seen a few posts on a social media platform. Yet investors can sometimes be more fact-based when giving advice to those they care about, than in their own decisions. To establish the habit of getting facts, imagine the investment you're considering is not for you but for your grandmother. What facts would you want her to know before making the investment?
Say you've mostly been holding Canadian stocks but your friend has been doing well with US stocks and suggests you consider investing in this market. Your friend has held a tech-heavy portfolio and mentions she's achieved a very strong return over the last decade. What are some facts you can gather? You can look at the returns of the US market going back to the 1920s, not just for stocks but also for bonds and Treasury bills, together with inflation1. Here you can see the messy history of markets, including the stagflation of the 1970s, two tremendous decades in the 1980s and 1990s, a lost decade in the 2000s and a very strong market performance from 2009 to the present.
By gathering these facts, you develop a sense of how markets behave and what to expect — over a longer period than your friend has been investing. Yes, you can have bull markets that last for a decade or longer — but you can also have lots of ups and downs with no real gains for just as long. By getting the facts and using them to set realistic expectations in your investment plan, you give yourself a better chance of following your plan, including how long to hold your position and what kind of losses you're willing to accept.
Seek opinions
The second habit of Knowing is to seek opinions. Markets are forward-looking, so you want to get a variety of different opinions on how investments might perform. On the CIBC Investor's Edge platform, for example, investors have access to reports from equity analysts and insights from economists. Think broadly about your sources, since insights don't always come from the most obvious places. For example, Daniel Kahneman, a psychologist, won the Nobel Prize in Economics for his insights into behavioural finance2. Giovanni Santostasi, a physicist, has developed a mathematical model to explain the growth of Bitcoin as a human network, similar to a city3.
Anyone who has run a business will be familiar with the rule of thumb of "Get three quotes" for a contract. As an investor, your approach should be similar. Don't just go with the first opinion you hear. Insist on getting a few different opinions about a company, its strategy and management team. Think about the quality of these opinions and whether the person providing them might have an incentive to be unduly positive or negative.
Organize your sources like a librarian. Create bookmarks or add sources to your favourites folder in your web browser by topic and update them as you add new sources. Managing information is part of managing investments, based on a deliberate effort to seek out, identify and include opinions that are different from what you typically encounter.
Test your thinking
The third habit of Knowing is to test your thinking. Even after getting the facts and seeking different opinions, there's no need to rush into making investment decisions. Instead, sit with the idea for a while and test your thinking by writing a "note to self". Include the rationale for buying, upside price targets, catalysts for these targets and timelines, reasonable and worst-case losses, and invalidation (what would cause you to lose faith in holding the investment). These "notes to self" create the habit of forming if-then investment logic, where you test your thinking and anticipate how you would respond to different scenarios.
Effective investors might spend hours testing their thinking, compared to a few minutes of executing trades. Less effective investors might spend most of their time executing trades, with relatively little or no time testing their thinking. Those who have not tried testing their thinking before trading might think it sounds like analysis-paralysis. When used well, it's the opposite. When you're comfortable with the logic of an investment decision, it becomes easier to act quickly when needed.
More to explore
This wraps up part 2 of the series on Knowing. We invite you to continue with part 3 on Framing. This includes looking beyond numbers on a screen – applying knowledge from probability, psychology and history to make better decisions. Part 3 concludes the 10 habits of highly effective investors series with a section on Improving, which brings everything together into a larger habit of how you operate as an investor.
