by Benjamin Graham (Revised Edition):
ย ย ย 1. Value Investing: Focus on buying stocks for less than their intrinsic value. Intrinsic value refers to the company’s underlying worth, not just its current market price.
ย ย ย 2. Mr. Market: View the stock market as a moody character, Mr. Market, who sometimes offers you bargains (undervalued stocks) and sometimes tries to overcharge you (overvalued stocks).
ย ย ย 3. Margin of Safety: Never pay full price for a stock. Build a margin of safety by buying stocks significantly below their intrinsic value, protecting yourself from market fluctuations.
ย ย ย 4. Distinguish Between Investment and Speculation: Investing involves careful analysis and a long-term perspective. Speculation is more akin to gambling, focusing on short-term gains.
ย ย ย 5. Be Emotionally Disciplined: Don’t let emotions cloud your judgment. Stick to your investment plan and avoid panic selling during market downturns.
ย ย ย 6. Diversification: Spread your investments across different asset classes and industries to mitigate risk. Don’t put all your eggs in one basket.
ย ย ย 7. Patience is Key: Building wealth through value investing is a slow and steady process. Don’t expect to get rich quick.
ย ย ย 8. Think Like a Business Owner: When you buy a stock, you’re essentially buying a piece of a business. Analyze the company’s fundamentals, financials, and long-term prospects.
ย ย ย 9. Focus on the Long Term: Don’t get caught up in daily market fluctuations. Invest for the long haul and focus on companies with strong potential for sustainable growth.
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10. Know When to Sell: Even undervalued stocks can become overvalued. Learn to identify when it’s time to sell a stock and redeploy your capital into better opportunities.
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