"Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1"

Although even the best make wrong investments, over the long term investing is about making money. But first, investors should seek to protect their capital before even thinking about profits. Protect your capital, otherwise you’ll have none to invest.
 

"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."

                                               and 

"To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects.” 

Succeeding in investing doesn’t require great intelligence. Success isn’t only for the super smart. You don’t need fancy financial models and the latest trading systems to make it.

Above all, protect your capital

Warren Buffet’s Investing Wisdom- Part I
Buffet has made many comments about investing, thus sharing his wisdom. We selected some of the most important ones to share with the readers together with our commentary.

Find out here how this investor made millions in the market  with his small cap bets.

”Never invest in a business you cannot understand.”

                                          and 

“Risk comes from not knowing what you’re doing."

You need to understand what you’re getting into. Do a thorough homework.


“What we learn from history is that people don’t learn from history.”

Some will never learn from mistakes.

 
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

It is because few people think for themselves when it comes to investing. We like to take action on tips of questionable value and follow the hype.

 
“We have long felt that the only value of stock forecasters is to make fortune-tellers look good.” 

That’s a great comment about investment tips. Even when it comes to professionals, don’t follow them without questioning their underlying assumptions.


"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."

That’s an awesome statement about not following the crowd mindlessly. (That’s not to say that you should always be a contrarian.) Greed will tend to overvalue the market; fear will make the crowd run for exit, often undervaluing the market.
 

“The Stock Market is designed to transfer money from the Active to the Patient.”

Patience is a virtue- in life and when it comes to investing.


"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."                                      
                                         and

"Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph.

Simplicity is important as well. Things don’t have to be that complicated. The more complex the investing / trading system, the more assumptions there are, and more ways it can go wrong.

 
Summary:

  • Above all, protect your capital
  • Know what you’re doing
  • Make it simple and be patient
  • Question assumptions the professionals make
  • Don’t blindly follow the crowd and watch out when you hear tips
  • Remember the greed/fear factor



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