There are 16 key principles of value investing that you should always keep in mind.
- Investing should never be confused with speculating.
- “Margin of safety” is an attitude, not a calculation.
- Invest only in what you can understand.
- “Bottom up” is far simpler than “top down.”
- Think independently – do not rely on Wall Street.
- Qualitative analysis is just as important as quantitative.
- Value investing requires extraordinary patience.
- Buy low, sell high.
- Ignore the noise – do not waste time on maintenance of ideas.
- Look at lots of companies and start with the A’s.
- Why value investing will always work, mean reversion.
- Fish in the best ponds, the role of academic research.
- Know what you own – do not over-diversify.
- Stay calm – have confidence in your process.
- Have a good sell discipline.
- Volatility is not a risk.
Click on a principle to get a more elaborate explanation.