1.Begin with a prayer. If you begin with a prayer, you can think more clearly and make fewer mistakes.
2.Outperforming the market is a difficult task. The challenge is not simply making better investment decisions than the average investor1. The real challenge is making investment decisions that are better than those of the professionals who manage the big institutions.
3.Invest - don't trade or speculate. The stock market is not a casino, but if you move in or out of stocks every time they move a point or two, the market will be your casino. And you may lose eventually - or frequently.
4.Buy value, not market trends or the economic outlook. Ultimately, it is the individual stocks that determine the market, not vice2 versa. Individual stocks can rise in a bear market and fall in a bull market. So buy individual stocks, not the market trend or economic outlook.
5.When buying stocks, search for bargains among quality stocks. Determining quality in a stock is like reviewing a restaurant. You don't expect it to be 100% perfect, but before it gets three or four stars you want it to be superior.
6.Buy low. So simple in concept. So difficult in execution. When prices are high, a lot of investors3 are buying a lot of stocks. Prices are low when demand is low. Investors have pulled back, people are discouraged and pessimistic. But if you buy the same securities everyone else is buying, you will have the same results as everyone else. By definition, you cannot outperform the market.
7.There's no free lunch. Never invest on sentiment. Never invest solely4 on a tip. You would be surprised how many investors do exactly this. Unfortunately there is something compelling about a tip. Its very nature suggests inside information, a way to turn a fast profit.
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