Best practices for better investing.

All investment decisions should start with measuring risk. The first question is not how much might be made, but what must be true for permanent capital loss to occur.

• Seek an adequate margin of safety before committing capital.
• Distinguish temporary volatility from permanent impairment.
• Understand leverage, liquidity and the strength of the balance sheet.
• Size positions so that being wrong remains survivable.
• Never allow enthusiasm for upside to obscure the downside case.

You can get lucky a few times, but still fail preparation cannot generate durable long-term results. Research should be sufficient to explain both why an investment deserves ownership and what would invalidate that judgement.

• Understand how the company earns its money.
• Read the financial statements rather than relying on headline metrics.
• Consider management’s record of allocating shareholder capital.
• Identify the economic characteristics that make the business durable.
• Write down the investment case before market movements rewrite the memory of it.

Good investing is less about constant activity than disciplined ownership. Capital should be allocated with a long horizon, a willingness to wait and an acceptance that the best decision will sometimes be to do nothing.

• Think and behave as an owner of businesses rather than a trader of securities.
• Prefer quality, resilience and recurring economics to fashionable narratives.
• Let valuation influence expected returns without allowing price alone to define quality.
• Do not confuse portfolio activity with portfolio improvement.
• Review mistakes without rewriting the circumstances in which the original decision was made.