Monday, 31 December 2012
1. Buy companies that have disciplined plans for achieving dramatic long-range profit growth and have inherent quailities making it difficult for newcomers to share in that growth.
2. Buy companies when they are out of favour.
3. Hold a stock until either (a) there has been a fundamentall change in its nature (e.g., big management changes), or (b) it has grown to a point where it no longer will be growing faster than economy as a whole.
4. De-emphasize the importance of dividends.
5. Recognise that making some mistakes is an inherent cost of investment. Taking small profits in good investments and letting losses grow in bad ones is a sign of abominable investment judgement.
6. Accept the fact that only a relatively small number of companies are tryuly outstanding. Therefore, concentrate your funds in the most desirable opportunities. Any holding of over twenty stocks is a sign of a financial incompetence.
7. Never accept blindly whatever may be the dominant current opinion in the financial community. Nor should you reject the prevailing view just for the sake of being contrary.
8. Understand that success greatly depends on a combination of hard, intelligence, and honesty.
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