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Rule #1 - Do not lose money! Rule #2 - Never forget rule number 1! ( by: Warren Buffet )

This site was created to help investors consistently beat the market by providing superior equity research.
For comments or questions please email: : admin@equityresearch.com

Investment Rules

Many of these rules are taken from reading about Warren Buffet and Seth Klarman. They are timeless and focus on value investment strategy.

1- Never Lose Money

2- Never forget Rule #1

3- Focus on Risk, not returns.

4- Buy Great companies at fair Prices, not fair companies at great prices.

5- If you can't hold it for at least ten years, don't buy it.

6- If you can't find something good to buy, hold your money in cash.

7- Make a few great decisions. It is impossible to make lots and lots of smart decisions.

8- If you know what you are doing, diversification on its own merits is foolish. Understanding your investments is the most important aspect of investing.

9- Read lots and lots of annual reports. Pay attention to free cash flow and earnings.

10- The dumbest reason to buy a stock is because it is going up.

11- You can't buy what is popular and do well.

12- Short Term Market Forecasts are Poison. Analyst Opinions are poison.

13- Doing well is outperforming good benchmarks like the S&P 500.

14- If you don't understand the business, don't buy it.

15- Temperament is more important than IQ.

16- Be happy when stock prices fall.

17- A good investment is based on your own reasoning, facts, and research. It should all be calculated on paper before any trading begins. Your sound reasoning should not change with markets.

18- Don't do consensus building. Don't look for approval. Base decisions on facts, mathematics, and reason.

19- People don't like to tell you that you are foolish and for that reason you can't trust consensus building. Unrealistic optimism often permeates investment decisions.

20- When reading financial data look for fraud in earnings. There are many ways that accountants will make earnings appear to be a lot better than they really. Look carefully at the balance sheet to get a better idea of how the company is doing.

21- The stock market is designed to transfer money from the active to the patient.

22- A company you buy must have a clear sustainable competitive advantage.

23- Always look for your bad investments.

24- Look for investments that are not highly correlated with market averages.

25- Measure market valuation by comparing the S&P 500 to that of 10 year US Treasuries and the ratio of the markets capitalization to US GDP.

26- Study 10Ks, 10Qs, and Proxy statements to understand risks to the company.

27- Buy companies where management is buying the stock in the open market. At the very least, management should have an ownership stake.

28- Follow the Smart Money.

29- Look for companies that have high returns on invested capital and that can raise prices if necessary.

30- International investments help reduce the risk of the devaluation of the dollar. As the dollar goes down, foreign investments will go up.