The first thing I do when people ask me what to invest in is strongly discourage them from investing in individual securities in any mannerism. Most people would be best suited to simply read our How to Invest and learn how to deploy index funds. For the true enterprising investor your work will never be done.
The formula I truly believe in is the Warren Buffett method which he describes as 85% Benjamin Graham and 15% Philip Fisher. But the gist of it comes down to being a learning machine. Going to bed smarter then you were when you woke up is the key to successful investing. There is no shortcut to make a lot of money. I’ve learned everything I’ve learned about investing and how to invest by studying the best. I read what Warren Buffett said to read, which led to me to Graham and Fisher, and each day:
“Go to bed smarter than when you woke up.” -Charlie Munger
I studied the traits that made good investors.
“The individual investor should act consistently as an investor and not as a speculator. This means. That he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.” -Benjamin Graham
“An investing operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
Investing is a process of constantly assimilating information and using that information to build upon using simple mathematics as grounding for ideals. We look for investments that meet a number of criterias as displayed in our Investment Checklists and focus on outperformance in longer periods of time then people are typically used to. Wall Street is very short term. People are fickle. People pull money from mutual funds and fire their advisors because of a bad year. We do not speculate on what Congress, or where Interest rates or where the economy will go. Investing is the process of what you get versus what you give.
We remain patient and expand our knowledge and study while waiting for suitable opportunities that meet the required margin of safety. We never try to make a good sale, we try to make a good purchase. We’re patient. I can’t stress this enough. The more you act the more fees you’ll generate. The stock market is a no strike game. There is no penalty for passing.
Under normal market conditions opportunities will be more difficult to ascertain but during certain periods like the Financial Crisis there will be tons of available values. If we’re very selective and look in corners of the markets most ripe for potential inaccuracies like spin-offs, mergers, restructurings, rights offerings, merger securities, recapitalizations, bankruptcies, and risk arbitrage we can find pockets of value in any stock market.
The way to begin to learn how to invest correctly is to read. Start on this page, read everything.
Read our top books we reccommend and don’t fret if the first time it’s heavy. Many of these I’ve read countless times and worn the cover and still marvel at the advice. The first time it was a bit overwhelming but now it’s a second language to me.
- Intelligent Investor
- Security Analysis
- Common Stocks Uncommon Profits
- You Can Be a Stock Market Genius
Study everything we have for all our great investors which is an on going project.
- Philip Fisher
- Benjamin Graham
- Charlie Munger
- Other Investors