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An important principle regarding what we value most in our lives (family, health, business, finance, sport, the arts, charity, spirituality, etc.) is: Serving others first serves us best.
Our 50+ years of investing experience tells us to focus on specifics, not generalities. People live their lives in details but tend to think and talk in generalities. What are the reasons?
Ben Graham was the founder of the strategy of value investing and Warren Buffett’s teacher and mentor. His timeless principles are as relevant today as they were yesterday and as they will be tomorrow.
The world around us is in the midst of a digital transformation and also a fourth industrial revolution that are changing the way we work and live, and are also offering opportunities for investment.
Most people tend to look at things they buy with an eye on the value they get for the price they pay. When prices drop, people buy more of the things they need and want – except for in the stock market. Stocks may be the only thing in the world where the lower the prices, the less people want of them.
Investing success is more likely when we remember the old adage – ‘buy low, sell high.’ Most people love buying their favorite goods such as food, clothes and cars on sale. But when investing, they don't think or act like value shoppers.
Investing success relies on thinking of your investments as your own business. Don’t ‘cut corners’ on caretaking your investments. Treat them as the serious business they deserve to be.
We find that most financial advisers are more knowledgeable about planning than they are about strategy and execution. A financial plan is a must but without a first-rate strategy, success is questionable, and unless the strategy includes first-rate execution, the plan will not succeed.
Our brain is wired to perceive before it thinks – to use emotion before reason. In the investing world, that means greed, fear, etc. can play major roles in decisions especially when markets are extreme. A big increase or decrease in valuations can make us emotionally susceptible.
Volatility in the markets causes many investors to make big mistakes in their investment programs. They tend to buy unwisely in rising markets and sell unwisely in declining markets.
We find that most people know little about investing. We also find that very few investors know themselves and are self-critical. Knowing who you are – investor or speculator – is essential. Which one are you?
While offense is crucial and exciting, defense – less noticeable and less glamorous – is the foundation of successful investors as well as successful sports teams. As legendary Alabama Football Coach Bear Bryant used to say: ‘Offense sells tickets, defense wins championships.’
