Companies that earn high returns on capital are usually better businesses. Quality matters.
The biggest risk for professional investors is career risk, not investment risk. This distorts behavior.
Buy stocks Wall Street has given up on. Neglected stocks often offer the best values.
Think in decades, not quarters. The best returns come from long-term compounding.
Understand supply and demand fundamentals. Prices ultimately follow these basics.
Understand the macroeconomic environment. It determines which sectors and assets will perform.
Our understanding of the world is inherently imperfect. We must accept fallibility as a fundamental human condition and ...
Markets evolve and patterns decay. Your models must constantly improve. What worked yesterday may not work tomorrow. Nev...
When markets move, rebalance back to target allocations. This forces you to buy low and sell high systematically. Rebala...
Invest with honest, capable management who treat shareholders as partners. Bad management can destroy the best business....
A trend is defined by higher highs and higher lows in an uptrend, lower highs and lower lows in a downtrend. Never trade...
Short selling requires even more rigor than going long. Shorts can run against you indefinitely. Always have a thesis, a...
Debt is a powerful tool when used correctly. Leveraged buyouts can create enormous value, but overleveraging destroys it...
The most important rule is to play great defense. Im always thinking about losing money, not making money. Cut losses fa...
Cut losses short and let profits run. Most traders do the opposite and wonder why they lose.
Invest with management teams whose interests are aligned with shareholders through significant ownership.
Hold 20-30 positions to reduce single-stock risk while maintaining concentration in best ideas.
High-quality stocks with strong balance sheets outperform over time with less risk.
Sell when a stock reaches fair value or the thesis breaks. Dont fall in love with winners.
Always demand a margin of safety. Pay less than intrinsic value to protect against errors.
Travel to see investments firsthand. Ground-level research reveals what reports cannot.
Wait for price to confirm your thesis before sizing up. The market provides feedback.
When you have a high-conviction trade and the market moves against you initially, that is often the best time to add to ...
Human traders are subject to fear, greed, and cognitive biases. Automated systems execute without emotion, following the...
Market timing is extremely difficult and usually counterproductive. Stay fully invested according to your strategic allo...
I don't have the ability to predict macroeconomic trends, and neither does anyone else consistently. Focus on understand...
Markets typically retrace 50%, 33%, or 25% of a move before continuing. The 50% retracement is the most important level ...
Invest in industries where competition is limited and rational. Avoid commoditized businesses with intense price competi...
Companies sitting on excess cash should return it to shareholders through dividends or buybacks.
Never risk more than a small percentage of your capital on any single trade. Proper position sizing ensures no single lo...
Explore core insights from different masters across investment topics