Today we are going to discuss a question: What are the characteristics and success factors of excellent value investors worth learning from?
Winning habit 1: Breakeven is always the first
"Investment Rule 1: Never lose money. Investment Rule 2: Never forget Rule 1." - Buffett
Investment Master: I believe that the most important thing is always to keep capital, which is the cornerstone of his investment strategy
Failed investors: believe that the most important thing is to make money
Core idea: Try to do high probability events, make investments with small risks or even no risks but high returns, and do not make investments with uncertainties.
Winning habit 2: Try to avoid risks
"Survival in the financial markets sometimes means timely withdrawal."--- Soros
Investment master: As a result of habit one, he is a risk averse.
Failed investors: think that only taking big risks can make big money.
Core idea: Unconscious and incompetent investment risks are enormous. Investment should be limited to the areas that you have the ability to do, that is, familiar areas. Invest in the areas that you can understand. "Risk is because you don't know what you are doing.".
Four risk control methods:
- Don't invest if you can't find the target
- Invest in enterprises whose price is much lower than the value to reduce risk
- Consider management risks
① Pay close attention to the market;
② Be calm and quick when it is necessary to change strategies;
③ Get rid of emotional control;
- Actuarial risk
The principle of insurance companies is to invest in a basket of enterprises whose book value is far less than the liquidation value.
Winning habit 3: develop your own investment philosophy
"Most people would rather die than think about it. Many people do."--- Bertrand
Investment Master: He has his own investment philosophy, which reflects his personality, ability, knowledge, taste and goals. Therefore, any two extremely successful investors cannot have the same investment philosophy.
Failed investors: no investment philosophy, or believe in others' investment philosophy.
Core idea: think about the nature of investment, have your own value theory, and define what is a good investment. Investment philosophy is based on a lot of independent research, and you can only get it through your own efforts.
Winning habit 4: develop your own personal choice, purchase and selling investment system
"In fact, every successful trader I know has finally formed a trading style that suits his personality." --- Randy McKay
Investment Master: has developed and tested its own personalized investment system for selection, purchase and selling.
Failed investors: There is no system, or the system of others is adopted without testing and adjustment. If this system is not used to him, he will adopt another system that does not work for him.
Core idea: There should be a target for measurement and operation accordingly. Different measurement methods should deal with different operation strategies, and should not be taken out of context.
Winning Habit 5: Decentralization is absurd
"Decentralization is a means for the ignorant to protect themselves. It is almost meaningless for those who know what they are doing."--- Buffett
Investment Master: It is absurd to think of decentralization.
Failed investors: they are not confident to hold large positions of any investment object.
Core idea: On the premise of being sure, concentrate superior forces to "annihilate the enemy". It is obviously uneconomical to focus your time and energy on the areas you want to invest, and devote all your energy to a large number of small investments.
Winning habit 6: focus on after tax income
"A really good manager will not wake up in the morning and say," Today I want to cut costs, which is like waking up and then deciding to breathe. "- Buffett
Investment Master: Hates paying taxes and other transaction costs, and skillfully arranges his actions to legally minimize taxes.
Failed investors: ignore or neglect the impact of tax and other transaction costs on long-term investment benefits.
Core idea: A penny saved is a dollar earned.
Winning Habit 7: Invest only in areas you know
"Like God, the market will help those who help themselves. Unlike God, the market will never forgive those who do not know what they are doing."--- Buffett
Investment Master: Only invest in areas he knows.
Failed investors: fail to realize that a deep understanding of their own behavior is a fundamental prerequisite for success. Seldom recognize that profit opportunities exist in their own areas of expertise.
Core idea: Every successful investor focuses on a small part of the investment objects that they "understand". "Understanding" is the basis for survival. It is easier to live in a familiar environment than in an unfamiliar one.
