Sunday, October 10, 2021
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Beginner’s Top Investing principles

  1. Avoid Emotions – Investing requires fact/fundamentals based on logical and rational thinking, detached from emotions. “If you can’t control your emotions, you can’t control your money” – Warren Buffet.
  2. Have a checklist/plan – One of the most important aspects of investing is to have some sort of strategy/checklist/plan whereby one can compare various assets’ investment prospects. “No wise pilot, no matter how great his talent & experience, fails to use a checklist” – Charlie Munger.
  3. Circle of competence: Focus on areas you are passionate about and are within your domain of expertise, where you will have an advantage over the average person.
  4. The margin of Safety: Only buy things on discount to value due to temporary distress, giving an adequate margin of safety which can protect us from the uncertainty of the future and possibility of error in our calculation.
  5. Probabilities: Learn to think in probabilities and how to get the odds on your side. “Heads I win, tails I don’t lose” – Mohnish Pabrai.
  6. Diversify appropriately – Diversify your funds across the appropriate investments within your circle of competence.
  7. Manage/Minimize Risk – Practice risk aversion and avoid taking dangerous, unnecessary risks to maximize gains. Minimizing risk is maximizing gains because if you are protected from loss, then making again is the only option (this is the true way of maximizing gains). “Rule No. 1 of investing is to never lose money, and Rule No. 2 is to never forget Rule No. 1” – Warren Buffet.
  8. Ignore/Block Noise – Don’t pay too much attention to social media influencers, forecasters, retail investors, hype, and the market’s regular fluctuations.
  9. Mother Hawk – Monitor, sustain and maintain your portfolio like a mother hawk protecting her nest. Be diligent.
  10. Patience & Long-term Thinking: Be patient in your investment activities. It takes time. Also, think long-term and maintain a long-term vision to take the best advantage out of compound interest.
  11. ETFs: Consider investing in a low cost ETF to begin with.

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