• Skip to content
  • Skip to primary sidebar

Right Attitudes

Ideas for Impact

The Eight Guiding Principles of Successful Investors

March 7, 2009 By Nagesh Belludi Leave a Comment

Eight guiding principles for successful investing in personal finance

“Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
* Warren Buffett

I have invested in stock markets since I was sixteen. Largely, I have been quite a successful investor, if you disregard the current slump in the financial markets. Over the years, primarily though my mistakes, I have learnt several invaluable lessons that have shaped my personal investing philosophy. Here is a summary.

  1. Do not invest money you cannot afford to lose. Know your limitations and own a mix of asset classes that are just right for you. Understand your ability to tolerate the hurts of losing money.
  2. Personal finance » Buying a stock is the easy part. Knowing when to sell is difficult. Buying a stock is the easy part. Knowing when to sell, especially in the case of hot stocks, is challenging. Do ample research before buying stocks or mutual funds. Establish a few criteria for selling and have the discipline to sell when a stock meets your criteria.
  3. Invest; do not speculate. You cannot try to outsmart the market by trying to time the market or day trade. You cannot be right on every trade and every stock that you lay hands on—research has shown that even the best investors are right in about five of every eight stock purchases.
  4. Do not fret about missing an opportunity. Opportunities abound in every market—bull or bear, short-term or long-term.
  5. Do your own research. Stock research is indeed hard work, yet indispensable. Monitor stocks frequently. Pay attention to price-to-earning ratio (PE,) price-to-earning-to-growth ratio (PEG,) revenues and cash flow. Learn how to read company balance sheets and other financial statements.
  6. Follow each company’s fundamentals carefully. Consider vital changes to the company’s operations, competitive landscapes, and industry prospects. Pay attention to macro-economic factors that may influence the industry.
  7. Financial markets » Be skeptical of too much optimism and hype. Be skeptical of too much optimism and hype. Do not pursue past performance and buy a stock or mutual fund, possibly after a period of high returns. Watch out for stock analysts and investment advisors touting stocks after good news and playing down stocks that have already fallen. Understand that financial advisors may promote mutual funds that pay them high commissions and not necessarily get better returns for you.
  8. Never lose sleep over your investments. Never let your emotions guide your investments transactions. Money is, after all, not the most important thing in your life.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Pocket (Opens in new window)
  • Click to email this to a friend (Opens in new window)

Related

Wondering what to read next?

  1. That Extra Salary You Can Negotiate Ain’t Gonna Make You Happy
  2. Book Summary of John Bogle’s ‘Little Book of Common Sense Investing’
  3. Is Day Trading and Speculation for You?
  4. Don’t Listen to Jim Cramer on Mad Money
  5. You are Rich If You Think You Have Enough

Filed Under: Personal Finance Tagged With: Getting Rich, Personal Finance

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Popular Now

Anxiety Assertiveness Attitudes Balance Biases Books Coaching Conflict Conversations Creativity Critical Thinking Decision-Making Discipline Emotions Entrepreneurs Etiquette Feedback Getting Along Getting Things Done Goals Great Manager Leadership Leadership Lessons Likeability Mental Models Mentoring Mindfulness Motivation Networking Parables Performance Management Persuasion Philosophy Problem Solving Procrastination Relationships Simple Living Social Skills Stress Thinking Tools Thought Process Time Management Winning on the Job Wisdom Worry

About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

Get Updates

Signup for emails

Subscribe via RSS

Contact Nagesh Belludi

RECOMMENDED BOOK:
The Story of My Experiments with Truth

The Story of My Experiments with Truth: Mahatma Gandhi

Gandhi's transparent glimpse into the mind of a truly great soul who demonstrated that an individual dedicated to conscious living, honesty, and love can overcome any violence or hatred.

Explore

  • Announcements
  • Belief and Spirituality
  • Business Stories
  • Career Development
  • Effective Communication
  • Great Personalities
  • Health and Well-being
  • Ideas and Insights
  • Inspirational Quotations
  • Leadership
  • Leadership Reading
  • Leading Teams
  • Living the Good Life
  • Managing Business Functions
  • Managing People
  • MBA in a Nutshell
  • Mental Models
  • News Analysis
  • Personal Finance
  • Podcasts
  • Project Management
  • Proverbs & Maxims
  • Sharpening Your Skills
  • The Great Innovators
  • Uncategorized

Recently,

  • Knowing When to Give Up: Establish ‘Kill Criteria’
  • Inspirational Quotations #990
  • To Live a Life of Contentment
  • What You Most Fear Doing is What You Most Need to Do
  • Manage Your Own Career—No One Else Will
  • Be Open to Being Wrong
  • Things Will Look Up Soon

Unless otherwise stated in the individual document, the works above are © Nagesh Belludi under a Creative Commons BY-NC-ND license. You may quote, copy and share them freely, as long as you link back to RightAttitudes.com, don't make money with them, and don't modify the content. Enjoy!

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.