Darren Winters runs through The Ten Commandments of investing put forward by the world top investors. This is worth keeping by your side. They say if you want to learn how to play a game well then study the grandmasters of the game.
The world top investors have gone through fire and water and come out the other end as winners. If these winners take to the stage to explain how they made it then they are the true teachers. We know what the deadly sins of investing are, so now let’s take a look at the ten commandments of investing from billionaire investors like Warren Buffett.
First on the list of successful investing commandants is to stay rational
“buy not on optimism but on arithmetic” said Benjamin Graham.
Graham taught Warren Buffett how to invest. Graham made a 22% return on capital during the Great Depression and WWII by staying very rationale. Emotions are very alive when investing real money. Don’t let your emotions get out off hand. You are going to experience greed when asset prices are rising and fear when they are falling. Keep your emotions in check, stay rationale.
Second on the list of successful investing commandants is stick with what you know
Know what you own and why you own it. Focus your attention on industries that you are already spending your money on your places where you are making your money. Understand the business that you own.
Third, on the list of successful investing commandants is do your homework
“Never invest in a business that you cannot understand”, Warren Buffett.
Decide why you would invest in the business then play devil’s advocate invert the argument and look at the reasons why you wouldn’t invest in the company. If you can talk yourself out of it, then it probably wasn’t a good investment.
Fourth on the list of successful investing commandants is to love what you own
Attach your values to the business you want to own. Put your money where your mouth is.
Fifth on the list is that the CEO should be trustworthy and transparent
Sixth on the list of successful investing commandants is always buy a stock when it is on sale
The aim is to buy a business at half of what it is worth that way you are likely to make money on the stock. Strive to buy that $10 of value for $5.
Seventh on the list of successful investing commandants is to remember that the price of a business is not always equal to its value
When the price gets way too high we sell and when the price gets way too low be buy.
Eight on the list is buy when there is fear and sell when there is greed
The greater the stigma or emotion the better the bargain. When it is really hated then it is really on sale.
Be “Fearful when others are greedy and greedy when others are fearful.” Warren Buffett.
Ninth on the list of successful investing commandants is to be patient
Investing for the long-term means investing in companies that are likely to be in business for the next 10 years.
Tenth on the list of successful investing commandants is learning to invest on your own
Nobody cares about your money as much as you do.