Investing Insights

Warren Buffett's Golden Rule: DON'T LOSE MONEY!

Warren Buffett's "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1," is perhaps his most famous investment principle. It's deceptively simple, but profoundly important.

This isn't about avoiding all risk, as that's impossible in investing. It's about emphasizing downside protection. Buffett's focus is on preserving capital and avoiding significant losses. Losing money can have a devastating impact on your long-term returns because it requires a much larger gain to recover.

How does Warren Buffett avoid losing money?

1. Value Investing: He buys undervalued companies with strong balance sheets and a margin of safety. This means he's buying assets for less than they're worth, providing a cushion against potential losses.
2. Circle of Competence: He only invests in businesses he understands well. This allows him to assess risk more accurately.
3. Long-Term Perspective: He holds investments for the long term, avoiding short-term speculation and market timing.
4. Patience: He's willing to wait for the right opportunities and avoids rushing into investments.

In essence, Warren is advising us to prioritize capital preservation above all else. Focus on avoiding losses, and the gains will take care of themselves.

3 months ago | [YT] | 20

Investing Insights

John Templeton, a legendary global investor, advocated for a clear investment goal: "Invest for maximum total real return."

This encompasses all the ways you can make money from an investment, not just one aspect. It includes:

1. Capital Appreciation: The increase in the price of the asset (e.g., stock price going up).

2. Dividends: Cash payments made by companies to their shareholders.

3. Interest: Income earned from bonds or other fixed-income investments.

Templeton believed in considering all sources of return when evaluating an investment.

Focusing on "maximum total real return" forces you to think beyond short-term gains and consider the long-term impact of inflation on your wealth. It encourages you to seek out investments that can truly grow your purchasing power over time.

3 months ago | [YT] | 4

Investing Insights

Benjamin Graham, the father of value investing, offered a profound insight into the nature of the stock market: "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

What does this mean for investors?

* Don't get caught up in short-term market noise: Ignore the daily fluctuations and focus on the long-term fundamentals.

* Be a value investor: Look for companies whose stock prices are below their intrinsic value. The market may be mispricing them in the short term, but eventually, the weighing machine will prevail.

* Be patient: Long-term investing requires patience and discipline. It takes time for the market to recognize the true value of a company.

In essence, Graham is advising us to ignore the short-term popularity contests and focus on the long-term fundamentals. Invest in solid companies with a proven track record, and the market will eventually reward you.

3 months ago | [YT] | 10

Investing Insights

Tom Watson Sr., the founder of IBM, famously said: "I am not a genius. I'm just smart in spots - and I stay around those spots."

Watson wasn't claiming to be an expert in everything. He recognized his strengths and focused his energy and efforts in those areas. He understood the importance of knowing what you're good at and sticking to it.

This quote can be applied to investing by:

- Understanding your investment style and risk tolerance.

- Focusing on industries or companies you know well.

- Delegating investment decisions to professionals if you lack the time or expertise.

In essence, Watson's message is to leverage your strengths, focus your efforts, and stay within your circle of competence. Don't try to be a jack-of-all-trades. Become a master of your chosen domain.

3 months ago | [YT] | 16

Investing Insights

Warren Buffett's quote, "Never invest in a business you don't understand," is a cornerstone of his investment philosophy and a crucial piece of advice for any investor.

Before putting your money into a company, you need to have a clear understanding of how that business operates.

- The business model: How does the company make money? What are its revenue streams?

- The products or services: What does the company sell? What are the key features and benefits?

- The industry: What are the trends and challenges in the industry? Who are the competitors?

- The financials: How is the company performing financially? What are its key metrics (revenue, earnings, debt)?

- The competitive advantage: What makes the company unique and able to compete effectively?

- The management team: Who are the key leaders? What is their track record?

So, why is understanding a business so important?

Because of these 04 things:
1. Allows you to assess risk: If you don't understand the business, you can't properly evaluate the risks involved.

2. Enables informed decision-making: Understanding the business allows you to make rational decisions based on facts, rather than emotions or speculation.

3. Provides confidence: When you understand the business, you're more confident in your investment decisions and less likely to panic during market downturns.

4. Helps you identify long-term opportunities: Understanding the business allows you to see the long-term growth potential.

In essence, Warren Buffett is advising us to stick to our circle of competence. Invest in businesses you understand, and avoid those that are too complex or confusing.

Next time you start a new investment, would you consider these things before making a bold move?

3 months ago | [YT] | 11

Investing Insights

Peter Lynch, the legendary Fidelity Magellan fund manager, offers a simple yet powerful warning: "Long shots almost always miss the mark."

"Long shots" in investing refer to high-risk, high-reward opportunities – penny stocks, unproven companies, or volatile sectors where the odds of success are very low. While the potential payoff can be huge, the likelihood of losing your entire investment is significantly higher.

The reasons why long shots often fail are:

- Lack of fundamentals: Many long-shot companies lack a solid business model, consistent earnings, or a competitive advantage.

- High competition: They often operate in crowded markets with established players.

- Speculative hype: Their prices are often driven by hype and speculation, rather than underlying value.

- Management issues: They may have inexperienced or unproven management teams.

Instead of chasing long shots, Lynch advocated for investing in well-established companies with solid fundamentals, consistent earnings, and a proven track record. While these companies may not offer the potential for explosive growth, they provide a much higher probability of long-term success.

What do you guys think about this piece of knowledge from Peter? Have you ever aimed for any long shot during your investing yourney? Could you please share in the comments so we can all learn together?

3 months ago | [YT] | 12

Investing Insights

Warren Buffett, despite his immense wealth, remains grounded.

He attributes his success to a simple combination: "My wealth has come from a combination of living in America, some lucky genes, and compound interest."

- Living in America: Buffett acknowledges the opportunities afforded by the American economic system, with its robust markets, entrepreneurial spirit, and rule of law. He recognizes that the environment in which he built his wealth played a significant role.

- Some Lucky Genes: This is a bit of self-deprecating humor, but it hints at the inherent advantages he may have had – perhaps a predisposition for logical thinking, risk assessment, or a long-term perspective. He's acknowledging that some factors are beyond our control.

- Compound Interest: This is the real key! Buffett has repeatedly emphasized the power of compound interest. It's the snowball effect of earning returns on your initial investment and on the accumulated interest over time. It's the driving force behind long-term wealth creation.

While we can't all choose where we're born or our genetic makeup, we can all harness the power of compound interest. By starting early, investing consistently, and reinvesting our earnings, we can build wealth over time.

When do you plan to harness the power of COMPOUND INTEREST? I started this February 😊

3 months ago | [YT] | 12

Investing Insights

Benjamin Graham, the father of value investing, gave us a clear distinction between investing and speculation.

- Thorough Analysis: This is the foundation. It means doing your homework. It's about researching a company's financials, understanding its business, assessing its competitive landscape, and evaluating its management. It's not just a hunch or a tip from a friend.

- Safety of Principal: This means protecting your initial investment. Graham emphasized downside protection. You should invest in companies that are financially strong and have a margin of safety, meaning you're buying them at a price significantly below their intrinsic value. This provides a cushion against potential losses.

- Adequate Return: This means earning a reasonable profit on your investment. Graham wasn't looking for get-rich-quick schemes. He aimed for consistent, long-term returns that compensated him for the risk he was taking.

- Speculative: According to Graham, anything that doesn't meet the criteria of thorough analysis, safety of principal, and adequate return is speculation. This includes things like chasing "hot" stocks, day trading, and investing based on rumors or hunches.

In essence, Graham is advocating a disciplined and analytical approach to investing. He believed that investing should be a rational process, not a gamble. If you're not protecting your principal and earning a reasonable return based on thorough research, you're speculating, not investing.

So, the next time you're about to pour your hard-earned money into any stocks, would you be able to be honest and tell your own self whether that is an INVESTMENT or purely a SPECULATION?

3 months ago | [YT] | 10

Investing Insights

Hey everyone,

This has been the best month so far for my channel and very happily I reached a wonderful milestone "500 Subscribers".

Thank you so so much everyone for your supports!

From the bottom of my heart, you are the reasons that I keep coming back and keep creating valuable investing related contents even though sometimes I felt like not doing it and start to doubt myself about whether my videos are of any help to any of you.

But my dream is to help as many as possible not to make the same mistakes that I made since I started to get into investing, especially in the stock market in 2016. Through many ups and downs and not finding anywhere on Youtube where they show you a framework on how to properly understand the market, how to not follow the crowd and how to be confident in your own judgements. Those are the WHYs I created this channel, it is also a place where I relearn all of what I acquired the last 10 years in the investing field.

Anyways, I have plans on creating more personal experience from how I started at literally ZERO knowledge until I can just confidently made my own investing decisions without listening to all the advisors out there (I used to be one of them anyway, hehe). So I hope my new contents as well as the ones I have been creating will continue to be helpful for your investing journey.

Good luck and May the odds be with you all 💚

Jack

4 months ago | [YT] | 4

Investing Insights

Warren Buffett's quote:
"Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard," is a powerful analogy for successful investing and achieving long-term goals.

The "SCOREBOARD" represents short-term market fluctuations, daily stock prices, and the constant barrage of financial news. Focusing on the scoreboard leads to emotional decision-making, chasing quick profits, and panicking during downturns.

The "PLAYING FIELD" represents the underlying fundamentals of the companies you invest in – their business model, competitive advantage, management team, and long-term prospects. Focusing on the playing field means doing your research, understanding the businesses you own, and making rational decisions based on their long-term value.

So, what you need to do is:

1. Don't get caught up in short-term price swings. They are often driven by emotions and speculation, not by the true value of the company.

2. Focus on understanding the company's financials, competitive position, and long-term growth prospects.

I believe these 2 concepts will help you a great deal on your investing journey.

Share your thoughts about this quote! Which type of player are you?

4 months ago | [YT] | 12