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The first rule of investing is not to lose money. The second rule is not to forget the first, and that's all there is to it. If someone is sitting in the shade today, it's because someone planted a tree a long time ago. Risk comes from not knowing what you're doing. The key to investing is not assessing how much a sector will impact society or how much it will grow, but determining the competitive advantage of any company and, above all, the durability of that advantage.
Buying a great company at a reasonable price is much better than buying a reasonable company at a great price. Price is what you pay, value is what you get. Successful investments require time, discipline, and patience. No matter how great the talent or effort, some things just take time. You can't produce a baby in a month by impregnating nine women.
A fixed rule determines my buying: Be afraid when others are greedy, and be greedy when others are afraid. When you combine ignorance and leverage, you get quite interesting results. Today's investor doesn't profit from yesterday's growth. Building a reputation takes 20 years, but ruining it takes 5 minutes.
If you think about it, you do things differently. You only know who's swimming naked when the tide goes out. Better than you. It's better to hang out with people whose behavior is better than yours. Choose your business friends and don't be dragged in that direction. Chains of habit are too light to be felt until they're too heavy to be broken.
Our time holding a stock in our favorites is forever. In business, the rearview mirror is always clearer than the windshield. Derivatives are financial weapons that lead to mass destruction. He's not looking to jump over 7-meter bars, he's looking for 1-meter bars around me to jump over. The only way to get love is to be lovable.
It's very frustrating to have a lot of money. You want to think you can write a check worth a million dollars. You can say, "I'm going to buy love," but that's not how things work. The more love you give, the more you receive. If you've reached my age and nobody thinks well of you, it doesn't matter how big your bank account is; your life is a complete disaster.
The smarter the journalists, the better off they are in society. Because people read the press to inform themselves to a certain extent, and the better the teacher, the better the student body. Remember that the stock market is manic-depressive. If you find yourself in a chronically leaky boat, the boat...
The energy you spend on changing things will be more efficient than the energy you spend on repairing leaks. Be wary of investment activities that receive applause; big moves are often met with complacency and yawning. A very high purchase price for a stock in a perfect company can undo the effects of positive business developments over the next 10 years.
Never invest in a business you don't understand. Time is the friend of great companies and the enemy of mediocrity. The two most important words in investing are margin of safety and safety pay. Don't try to cross a bridge with a capacity of £10,000 in a truck costing £9,800; go a little further down the road and find a bridge with a capacity of £15,000.
If a business is doing well, its stock will eventually follow. Buy something you would be happy to hold onto even if the market closed for ten years. All it takes to invest is to choose good stocks in good times and stick with them as long as they remain good companies. I never try to make money on the stock market; I buy on the assumption that they could close the market the next day and not reopen it for 5 years.
Long-term investments include pension funds, university foundations, and individuals with a savings mindset. It's a huge mistake for investors to measure the risk of their investments by the ratio of bonds to stocks in their portfolios. Calling someone who actively buys and sells in the market an investor is like calling someone who constantly has one- night stands a romantic.
The stock market is designed to transfer money from the impatient to the patient. If you don't plan to own a stock for ten years, don't even think about owning it for ten minutes. An investor should treat the markets like a game where they only have 20 chances in their lifetime. Don't take annual results too seriously.
Instead, focus on 4 or 5-year averages. Why not invest your assets in companies you truly love? Too much of something good can be great. Business schools reward difficult and complex behaviors more than simple ones, whereas simple behaviors are more effective. Some human traits like to make easy things difficult.
The most important quality for an investor is not intelligence, but temperament. You don't need a temperament that takes great pleasure in being with or against a crowd. Success in investing is not related to an A2. What you need is to be able to control the impulses that get other people into trouble in investing.
You don't need to be a rocket scientist; investing is for someone with an IQ of 160. It's not a game where the one who has 130a2a wins. For most people, what matters in investing and saving isn't how much they know, but how realistically they define what they don't know. There's nothing wrong with an investor who knows nothing realizing this.
Being an investor who knows nothing means you think you know something despite the losses. If you find yourself in a hole, the most important thing to do is stop digging. Predictions can tell you a lot about the person making the prediction, but they tell you nothing about the future. Buy a stock like you buy a house; understand it that way and be happy to own it, even if there's no market for it.
It's better to own a part of the famous hop diamond than the whole diamond jewelry set. You only need to be able to evaluate companies within your own circle of expertise. The size of this circle isn't very important, but knowing its limits is vital. Diversification is a protection against ignorance.
It doesn't mean much if you know what you're doing. Wide diversification is only necessary when investors don't understand what they're doing. Opportunities rarely come. If it's raining gold, get out the bucket, not the thimble.
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