From Graham to Buffett and Beyond (Wiley Finance) 2nd Edition by Bruce C. Greenwald, Judd Kahn, Erin Bellissimo, Mark A. Cooper, and Tano Santos:
1. Focus on intrinsic value. Value investing is about buying securities for less than their intrinsic value, which is an estimate of the company’s true worth based on its assets, earnings potential, and future growth prospects.
2. Margin of safety. Always buy with a margin of safety, which means paying less than your estimate of the intrinsic value. This margin of safety protects you from losses if your estimate of intrinsic value is too high.
3. Know your circle of competence. Only invest in securities that you understand and can analyze effectively. Don’t venture into areas where you lack expertise.
4. Be patient and disciplined. Value investing requires patience and discipline. Don’t be swayed by market fluctuations or short-term trends. Focus on the long-term and stay committed to your investment strategy.
5. Be contrarian. Don’t follow the herd. Be willing to buy securities that are out of favor with the market if you believe they are undervalued.
6. Beware of emotional investing. Don’t let emotions like fear or greed cloud your judgment. Make investment decisions based on rational analysis, not on emotion.
7. Conduct thorough research. Before investing in a company, conduct thorough research to understand its business, its competitive landscape, and its financial condition.
8. Consider the qualitative factors. In addition to quantitative factors, also consider qualitative factors such as the company’s management team, its corporate culture, and its industry trends.
9. Don’t be afraid to make mistakes. Everyone makes mistakes, even the most successful investors. Learn from your mistakes and don’t let them discourage you.
10. Value investing is a journey, not a destination. Value investing is a lifelong learning process. Continuously seek to improve your understanding of investing and adapt your strategy as needed.
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