This rule requires the discipline to do nothing until the market crashes or a stock is undervalued.
Stick to industries you know (e.g., tech, retail).
Good management keeps debt low to survive market downturns. 🏷️ Rule 4: Buy with a Margin of Safety
Even a great company is a bad investment if you pay too much. You must determine the "Sticker Price" (Intrinsic Value) and wait for a sale.
Never invest in something you cannot explain to a child. You should understand how the company makes money and its role in the industry.
Read annual reports and understand their product's "stickiness." 🏰 Rule 2: Seek a Durable Competitive Advantage (Moat)
Businesses that own a "must-use" service or infrastructure. 👤 Rule 3: Quality Management