Every good investor knows that successful investing is achieved by following a tried and tested set of rules. Not having or emulating these rules could mean making rash decisions which could result in buying into the market too late or selling too early.
Luckily, you don’t have to start from ground zero to draw up your own set of investing rules because we’re about to share a few rules from some of the most successful investors in history.
1. Warren Buffet
A multi-millionaire with net-worth of over $80.9 billion making him one of the richest men in America and unarguably one of the most successful investors in history, Warren Buffet is an authority in deciphering how the markets work.
His two key pieces of advice when evaluating a company to invest in are:
- First, look at the quality of the company — Which involves understanding balance sheets, listening to conference calls and having confidence in the management.
- Second, evaluate the price of the company — A move which should come only after you’ve acquired confidence in the quality of the company.
“Never invest in a business you cannot understand.”
Warren Buffet
2. Carl Icahn
Listed in Forbes magazine as having a current net worth of $16.7 billion, Carl Icahn is a private equity investor who gained a reputation as a corporate raider, buying large stakes in companies such as Time Warner, Yahoo, Blockbuster video and others.
One key advice from this seasoned investor is:
- Act upon your own exhaustive research based on facts, not opinions gotten from trusted sources. You can consider and verify other advice but they shouldn’t be the only reason to commit money.
You learn in this business.If you want a friend, get a dog.
Carl Icahn
3. Dennis Gartman
Dennis Gartman is an accomplished trader who since 1987, has published ‘The Gartman Letter’ — a daily commentary of global capital markets that is delivered to hedge funds, mutual funds, brokerage firms and trading firms around the world every morning.
Gartman’s quote below speaks to a big mistake investors make.
Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are ‘right’ only 30% of the time, as long as our losses are small and our profits are large.
Dennis Gartman
His advice:
- Don’t sell at the first sign of profits; let winning trades run.
- Don’t let a losing trade get away.
In other words, Gartman is saying that you should let a winning trade run and to get out of a losing trade quickly.
Final words:
As you start to apply your new investing rules learnt from the very best, and stay committed to following them, you’ll see the profits begin to come in.