Stock Investment Principles

I started investing in the stock market through Equity Funds from my VUL and UITF. Although my fund investments gave good returns, I knew I needed to exert more effort in order to get better returns. I had to learn and understand more about stock investing to increase my chances in earning better returns.

Before I began buying individual stocks, I armed myself with basic principles on stock investing through books and articles. I learned the basic ratios, learned how to read balance sheets and income statements.

I also learned  that controlling ones emotions is important when you invest in the stock market. I knew that decisions based on emotions will probably result in a unsatisfactory return. I needed to find a way to prevent myself from getting carried away by my emotions especially during high volatility in the market. I compiled a list of investment principles from successful investors to guide me in my investment decisions.

Warren Buffett

  • "Shares are not mere pieces of paper. They represent part ownership of a business. So, when contemplating an investment, think like a prospective owner." 
  • "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.
  • "Rule No.1 is never lose money. Rule No.2 is never forget rule number one." 
  • "Wide diversification is only required when investors do not understand what they are doing"
  • "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
  • "Be fearful when others are greedy. Be greedy when others are fearful."

Peter Lynch

  • "Never bet on comeback while they're playing "Taps"." 
  • "If you like the store, chances are you'll love the stock."
  • "Never invest in any idea you can’t illustrate with a crayon." 

Benjamin Graham

  • "In the short run, the market is a voting machine but in the long run, it is a weighing machine." 

Philip Fisher

  • "It is not the profit margin of the past but those of the future that are basically important to the investor."
  • "If the job has been correctly done when a common stock is purchased, the time to sell it is - almost never."

John Templeton

  • "Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria”