Investment Principles

Stick to principles, adapt to situations, and remember that compounding interest takes time; enjoy the journey and face problems head-on.

Best practices for better investing.

If you have read a few of my articles, you will undoubtedly have observed my profound appreciation for systematic approaches and meticulous processes in investing. I have a strong preference for committing substantial capital to ventures where the management commands my confidence. When acquiring an undervalued company, there may come a time when it is prudent to consider divesting once it reaches or surpasses its fair value. Such decisions can be challenging but when I identify exemplary companies and invest in them, I am content to let my investments remain undisturbed, allowing me to focus on broader endeavors.

I hold steadfast to the belief that preparation is paramount—preparing my mental frameworks and deepening my knowledge, so that when a prime opportunity presents itself, I can act with calm and decisive intent. I aim to be ever-ready to seize opportunities, armed with the discipline to recognize and wait for them. Patience is key, and when the moment arrives, I am resolved to act with conviction. Reflecting on my investment returns, I find that the most substantial gains have arisen from long-term compounding. My returns are not derived from frenzied trading, but rather from adhering to patience and a well-defined process. I remain true to my principles, and when a worthwhile opportunity emerges, I invest wholeheartedly.

Risk – All investment decisions should start with measuring risk

  • Only invest in companies with an appropriate margin of safety.
  • Only invest in companies with a good track record of growing earnings per share and net asset value.
  • Ensure all investments have a suitable potential return for the risk I will assume.
  • Ensure inflation and interest rates will not destroy the value of my investment.
  • Avoid like the plague, all companies who are likely to permanently destroy capital.

Research – You can get lucky a few times but skill and preparation generate long-term results.

  • Understand the sector and the business as well as you can
  • Consider the possibility of being incorrect and how this will affect my investment hypothesis.
  • Don’t fall foul of false certainty and overconfidence. You don’t know everything.
  • Consider value – not just price. Size is no guarantee of anything.
  • Be a business analyst; not a macroeconomist.

General Principles

  • Good ideas are rare – when the odds are in your favour, go all in!
  • Don’t fall in love with a company – always be willing to adapt to the situation.
  • Just because someone agrees with you doesn’t mean you are right. Mimicking others will get you average results.
  • Compounding interest is an amazing thing but it takes time.
  • Enjoy spending the proceeds of investing as much as collecting them. You can’t take it with you!
  • Don’t overlook the obvious by drowning in the detail.
  • Face your problems. It’s the only way to resolve them.

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These articles provide a basic introduction to the core tenets of my strategy and important concepts for successful investors.

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