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A few Investing principles/thumb-rules:
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Seek (unreasonable) Safety: For all their quotes about being courageous, Buffett, Klarman, Marks, Lynch... never really had to be (when buying, while avoiding — sure).
When margin of safety is high you don’t need to be brave. Wait for those opportunities.
2/n
When margin of safety is high you don’t need to be brave. Wait for those opportunities.
2/n
15% is a spectacular CAGR: You will bankrupt yourself trying to go for 30%. Don’t.
3/n
3/n
Focus on Large Caps: You can be more confident about their business/management/balance sheets.
Remember 96% of companies don’t beat 1 month treasuries over their lifetime.
You can place larger bets here. Absolute return is what matters.
4/n
Remember 96% of companies don’t beat 1 month treasuries over their lifetime.
You can place larger bets here. Absolute return is what matters.
4/n
Be Counter Cyclical: You will never catch the bottom/top. But it’s easier to know which end are you closer to in the cycle (look at historical index percentile PEs for eg). Position accordingly.
5/n
5/n
Always Sell Some: When you feel the stock/market is fully valued. Think of it as being happy with debt return on that portion of the portfolio rather than timing the market.
Only people who are fearful at the top can be greedy at the bottom.
6/n
Only people who are fearful at the top can be greedy at the bottom.
6/n
Save: Seeing cash build up in your portfolio at tops & drawdowns being countered by savings — helps you avoid big mistakes.
Can’t overemphasise this. Save!
7/n
Can’t overemphasise this. Save!
7/n
Be wary of experts: A lot of them are outright dangerous. Most large ‘investors’ in India made their big money in 90s. That was a very different environment/market. Most of them are gurus of nothing.
Think for yourself.
8/n
Think for yourself.
8/n
Let the ideas come to you: Don’t go chasing. “Chop wood, carry water. Chop wood, carry water.”
Put in the hours. Have patience.
9/n
Put in the hours. Have patience.
9/n
It’s not easy: Can’t be. Investing is the most competitive sport in the world. Indexing is a great option, probably the only option for most.
10/n
10/n
Framing Matters: “I don’t want to participate in the upside from here” is better than “I think this is the peak for this stock”.
11/n
11/n
Read: A lot.
You aren’t reading enough if you think you are reading enough.
12/n
You aren’t reading enough if you think you are reading enough.
12/n
Avoid Envy: You have to be fine with your neighbours getting rich. Especially when they are getting rich fast.
13/n
13/n
