From time to time, we need reminders to nudge us back to the our original course in order to meet our objective. So is our financial investment journey.
This week, I picked up an old book that traces the life of Mr Warren Buffett, explains how the “Baby Berkshires” comes about and reiterated the principles that Mr Buffett uses in guiding his investment philosophy. The book is called “Warren Buffett: Master of the Market: The Nine Principles of Wise Investing and Other Secrets” by Jay Steele.
This is a relatively old book, published in 1999. It is most suitable if you are unfamiliar or want to know more about Mr Buffett. But what I like about it is that it is a very easy read with hardly any technical jargon.
The most useful part of the book was the chapter that touches on the 9 principles of wise investment. It is a very good and timely reminder to me of how I should think, plan, structure and execute my investment journey. The 9 principles are:
(1) Know the numbers and what they mean.
(2) Invest in products you understand.
(3) Read widely to value prospects.
(4) Always maintain a margin of safety.
(5) Become a fanatic about investments.
(6) Avoid buying “popular” stocks.
(7) The secret of compound interest.
(8) Know when to invest.
(9) Never run with the street pack
I reflected on my follies made in 2017 and if I had stuck strictly to the principles above, then I would have lost a lot less money. Well, I don’t think I can be 100% disciplined but at least having reminded by these principles at the start of this year, I hope I will make fewer mistakes than last year.
The book has many quotes from Warren Buffett and many of them are probably well known to you already. But among them I find the following one most refreshing :
“Investing is not a game when a guy with 160 IQ beats the guy with 130 IQ. Rationality is essential. You are dealing with a lot of silly people in the marketplace” … how apt as I reflected haven’t I been silly too. Time to switch side this year.
Hope you find the above a useful reminder like I do.