The most important attribute of successful investors is discipline in following a set of investment strategies and rules. In other words you don’t have to have a high IQ, a high education, extensive experience, or even great instinct.
You can be a successful investor by being disciplined in following a set of investment strategies and rules that guide you through bull and bear markets, times of greed and times of fear, and periods of high risk and periods of great opportunity.
The following investment strategies and rules are proven ideas to make you a better value investor and improve investment performance:
Investment Strategies and Rules
1. Patience is a virtue; develop and cultivate it in your investment management. Patience is a biblical principle that, if applied to investing, will greatly reduce your investment mistakes and improve your investment returns.
Investment Rules Book
2. Only invest when the odds are heavily in your favor. (Patience)
3. Invest like an owner. Owners look at things differently. Most people care more about something they own versus something they rent. When you buy an investment think like a long term owner, not a renter.
4. Implement risk control strategies with diversification rules and don’t deviate from your parameters.
5. Understand the types of investment risk and try to avoid and mitigate them as much as you possibly can.
6. Concentrate on not losing money. It’s more important to not lose money, than make money. If you are preoccupied with making money you are apt to make bad decisions.
7. Know what kind of investor you are and the stock investing strategies that best fit your beliefs and personality.
8. Never invest money you might need because you will usually need it when you have to sell your investment at a low price.
9. There is a difference between saving, investing, and gambling . Know the difference and treat each one accordingly.
10. Don’t listen to financial prognosticators and forecasters. Understanding probability theory means focusing on the long term.
11. Only invest in what you understand. Good research leads to good investment decisions. If you don’t understand how and why a company makes money, don’t make the investment.
12. Minimize asset correlations by dividing assets among different asset categories. This is called asset allocation.
13. Never panic; but buy when others are fearful. This is when you will get the best price. When others panic, use some of your cash reserves to buy stocks at bargain prices.
14. Don’t time the market; you can’t pick the bottom or the top consistently. Learn how to make investment decisions based on value. Buy when values are good, and sell when values are high. This is something you learn over time.
15. Buy on corrections. Even raging bull markets have corrections which should be looked at as opportunities to buy something you wanted at a better price.
16. Sell when others are greedy. When the market is moving higher day after day, week after week; give them some of your stock. Your charity 😉 will usually be rewarded. No one ever goes broke taking a profit.
17. Avoid over diversification. Don’t own too many small positions or so many stocks that you become an index fund. This assures average performance and keeps you from owning only the very best opportunities.