Ten Timeless Principles From The World's Greatest Investors
1. INVESTOR OR TRADER
Decide if you are an investor or trader. Investors invest for the long term. Traders speculate for the short term. It's alright to pick either strategy, just not for the same investment.
2.LOW HANGING FRUIT
Increase your investment returns by striving to minimize fees and other costs. Technology is constantly creating innovative investment products with lower fees.
3.AVOID SCRAMBLED EGGS
Don't put all your investment eggs in too few baskets. Diversify across geographies, industries and investing themes. Practice sensible asset allocation across stocks, bonds and “real” assets.
4.PREPARE FOR PANIC
Mr. Market swings from euphoria to depression and back again. Nobody, including the most elite investors, can predict the future accurately. Avoid trying to time the market. Have a plan for a downturn.
5.DEFINE RISK FOR YOURSELF
Is risk the up and down gyrations of the market or is it the permanent loss of capital? Look at both the quality of the investment and the price. Buy the best possible quality at the lowest price. Try to buy with a margin of safety.
6.TAME YOUR BRAIN
Investing decisions are ideally made in the logical part of our brain. Many of us are caught in reacting impulsively. Educate yourself, learn consistently, and resist acting from FOMO – fear of missing out.
7.LIQUIDITY AND LOCKUP
Consider how quickly you can you get your money back. How easily can you sell the investment (liquidity)? How long is your money tied up in the investment (lockup)?
8.ENJOY THE PROCESS
Investing is deeply pleasurable to it’s best practitioners. Cultivate an abundance mindset – we enjoy luxuries today that royalty couldn’t access a 100 years ago. Billions of people will see their quality of life improve in the next decade. Invest accordingly.
Harness technology to automate every investment process you can. Save automatically. Rebalance automatically. Use technology to find the best investments for you automatically.
The best investors write books, blogs and give interviews. You can follow their teachings for almost no cost. Develop your own circle of investing competence and outsource the rest.