Warren Buffett's 10 Rules for Successful Investing.

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Warren Buffett's 10 Rules for Successful Investing

1. Invest in what you know…and nothing more.

Don't get involved in overly complex investments unless you have the intelligence or time to understand the variables in detail.

Use the knowledge you have of the industries you have experience with or can easily learn about.

2. Never compromise on business quality

Saying 'No' to a complicated business is easy. Finding high-quality businesses is a little harder.

Focus on buying high-quality companies with promising long-term opportunities for continued growth. Here, the measure of ROIC is useful.

3. When you buy a stock, plan to hold it forever

If you've done your research properly & the business' fundamentals remain intact, the best time to sell is never

I only sell a stock if the fundamental metrics breakdown or if capital is req'd for a faster growing opportunity

4. Diversification can be dangerous

The benefits of diversification are exhausted when you own any more than 30 stocks. Mutual funds tend to own hundreds! And this is partly why they fail to perform.

When your conviction is high, buy more of that stock.

5. Most news is noise, not news

99% of the headlines you read regarding a particular stock are meaningless and will have no impact on the stock's long-term growth if the company performs well.

Publishers always have an agenda.

Learn to ignore the noise and focus on the data

6. Investing isn’t rocket science, but there is no “Easy Button”

Many of the most successful investors of all time have been quoted saying that you do not require a degree to outperform the market.

You just need to the basic maths to see if a company is growing or not.

7. Know the difference between price and value

Stop getting so fixated on the current stock price. Prices are inherently more volatile than the fundamentals of the underlying business, you just have to compare the earnings to the price for any stock.

8. The best moves are usually boring

The stock market is not the place to get rich quick. If you want to get mega-rich slowly, the stock market is your best friend. Conservative strategies such as long-term index investing has the highest success rate for most people.

9. Low-cost index funds are sensible for most investors

If you can't avoid the following:
- Trying to time the market
- Taking excessive risks
- Trading on emotions
- Venturing outside our circle of competence

Just stick to index funds. You'll see more success with less stress.

10. Only listen to those you know and trust

Invest in businesses with competent leadership, a strong track record and no shady past. Mr. Buffett is better connected than you or I, so this is harder for us to figure out. But not impossible with the power of the internet!

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