The 12 Rules of Investing
There are an infinite amount of possible ways to make money. However here are 12 unique qualities many of them hold and have stood the test of time for centuries of volatile markets.

Try questioning yourself with each strategy. How many are you following?

1. Rule No. 1: Don’t lose money. Rule No. 2: Don’t forget Rule No. 1. Don’t be satisfied to let a few stocks in your portfolio lose a lot of money while one hits a home run.

2. Be an investor, not a speculator. Too many investors jump on the momentum bandwagon and chase stocks just because the price is going up. Most believe they can get out before the stock price crashes — but few do!

3. Price is what you pay, value is what you get. Valuation always matters. Learn how to value companies, and let us help you with it.

4. Buy with a margin of safety. Estimates of value depend on a wide variety of inputs and are never hard and fast. Buying stocks at a significant discount to valuation estimates provides a margin of safety.

5. Stop trying to predict the direction of the market. Timing the market is a futile exercise that no one has consistently mastered. If your investment thesis is right, the market will eventually come around. Try using Dollar-Cost averaging.

6. Patience is a key element of success. Don’t chase a stock with a price above your margin of safety; wait for it to come down. Once you buy, wait for the market to realize a stock’s value — weeks, months, or even years later.

7. Never invest in a business you can’t understand. The simpler the investment thesis, the better. Stay within your circle of competence.

8. Invest for absolute returns. Beating the market index is a laudable aim, but there’s no prize for breaking even when the market is down 5%. Our aim is to increase portfolio value over the long term. Also don’t forget to account for inflation, taxes and brokerage fees.

9. Be fearful when others are greedy and greedy when others are fearful. Don’t let the market psych you out of a good investment. Most investors swear off stocks when the market declines and greedily buy in when it’s up. To be successful, be contrarian.

10. Watch the business, not the stock. Checking quotes every day won’t improve your chances of success. Instead, watch the business fundamentals and management’s actions — those are the real drivers of value creation.

11. Know when to sell. It’s generally best to buy and hold for the long term, but you should sell if you have a better investment for your money, if your investment thesis was wrong, or if you simply need the cash.

12. Have fun with investing. Warren Buffett has always claimed to be “Just having fun”. There are far more important things in life than investing, which is only a means to an end.


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