How were the 1st 5 rules on my previous post, do they make sense to you? If they are, you may want to know the rests of them.
Rule $5 - Put in effort to do homework and find a target to achieve, but try not to set the target too high.
Mr. Warren carefully and precisely did his stock pick. He focused more on long term growing companies. After 20 years later, the company performance are still strong and stable. During 1973 and 1974, the stock market was collapsed. One of the US giant advertisement companies share price had down to 76 cents. During that time, Mr. Warren absorbing this company shares as much as he can, and then sold them for great profit after many years. Before he sold them, this stock annual return was 20%. What other investment in this world you can consistently obtain a annual return of 20% for many years? Don't forget, Mr. Warren bought the shares in bulk!
Technical analysis, anyone?Rule $4 - Take it easy with the noise from the stock market and economy outlook. Always remember, we want to buy a career, but not a stock!
There is nobody can consistently predict the correct market movement and economy outlook, not even David Brain or Mr. Warren. If you only chose to buy stocks under certain economy condition, you will always need to do stock switching. Eventually you will encounter loss in one day.
To own a stock, you need to feel comfortable and have confident with it, be it behave unstable for one or two years. If you don't plan to hold a stock for 10 years, then you better don't hold it for even 10 minutes.
Rule $3 - You don't have to always recover your loss from the same stock
For novice traders, they will buy when the stock is falling, logically it is cheaper to own when it goes down. But this game is not play like we want. No matter what investment it is, we should set an affordable stop loss. If it really hit our stop loss, we can try to invest other potential stock. If we aware we are suffering from the loss, we can always choose to let go.
Rule $2 - If you always trade with hot tips, you will loss all your capital within a year.
To be honest, by the time you obtain the 'tips', the public should already obtained and acted on it. Mr. Warren always claimed that he likes to stay in Omaha City, because no one is supplying internal news to him over there. If we did our homework properly, we will having a high chance to make a good decision.
Have you ever read any book related to Mr.Warren?Rule $1 - Diversification is only cater for those who don't know what they are doing.
Mr. Warren will only invest those companies which meet his requirements. And then he will buy and spend many years to hold it, just like Coca-Cola. Once he invested in that company, he know that he just need to wait, wait for his consistent return for many years.
Okay, here's are all the 10 rules the 2nd richest man in the world follow. Sound simple isn't it? Many people complaint that these rules don't apply with KLSE stocks. Well, if the company is growing, the stock price will definitely goes up. Else, you may want to invest in US stock?
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