Below are some of my main principles when it comes to investing. By following them I avoid making significant mistakes while growing the family’s assets over time.
Diversify! But do it with assets that don’t correlate each other. Most of the assets go in tandem.
Don’t panic! Do not be fearful or negative too often.
Admit errors. Recognize mistakes. Learn from your mistakes.
Buy value, not market trends or the economic outlook.
Timing is the difference between genius and fool. Timing is truly everything!
Understand why things work. Memorizing formulas is not enough.
Study the behavior of investors and speculators. Their actions “often inadvertently result in the creation of opportunities for value investors.”
If anybody laughs at your idea, view it as a sign of potential success.
Try to know more than other people. Do deeper due diligence.
Most perceived wisdom is a misconception. The media often propagates conventional wisdom.
Learn philosophy, history. Learn to Think.
Be extremely doubtful when you have people proclaiming “it’s different this time.”
Learn precisely what happened and what did not. This will help you understand what is about to happen in the world.
Observe how you react to mistakes. Discipline yourself to wait.
Don’t ignore decade-old standards of valuations for investments.
Never sell short unless prices are astronomically expensive, and you detect negative change coming.
Large price declines across the board should attract your attention. Sell during times of market hysteria and buy during times of panic. Buy low, Sell high.
History tell us that in every bull market nearly everything reaches an all-time high.
For a bargain to soar in price, there has to be a catalyst, and from an investment perspective, that catalyst is change. Whatever the change maybe, it must have a significant impact within a country or an industry.
Pay attention to what everybody else neglects. Sometimes, the more ridiculous an investment sounds to other people, the better the chances that it will yield a profit.
Start something that no one else has started.
The more certain something is the less likely it is to be profitable.
Anything that is a “must see”, “must try”, “must read” should almost certainly be avoided, especially if it’s popular.