Principle Driven Investing
We are investors, not speculators.
Every investment is the present value of all future cash flows.
If we don't understand it, we don't invest in it.
In the short run, the stock market is a voting machine. But in the long run, it is a weighing machine.
A great story can become a bad investment if you pay the wrong price.
Now guys, These are 5 tenets of principle driven investing that our community and myself live by.
These five tenets act like guardrails that keep me from making the costly mistakes that destroy most people's portfolios. When I remind myself "we are investors, not speculators", it stops me from chasing hot stocks or trying to time the market based on emotions or hype. Focusing on "present value of future cash flows" forces me to look at actual numbers instead of getting caught up in exciting stories about what a company might do someday.
The rule about only investing in what I understand has saved me countless times from putting money into complex businesses or trendy sectors that I can't properly evaluate - if I can't explain how a company makes money, I have no business owning it. Remembering that the market is a "voting machine" in the short term but a "weighing machine" long-term helps me ignore daily price swings and focus on fundamental business value, preventing panic selling during downturns or euphoric buying during bubbles. And that final principle - that great stories can become bad investments at the wrong price - is probably the most important tenet of all, because it stops me from overpaying for even fantastic companies just because I love their potential.
Together, these tenets force me to think logically rather than emotionally, focus on facts rather than feelings, and make decisions based on value rather than momentum - which is exactly how you avoid the expensive mistakes that turn investing into gambling.
These five tenets act like guardrails that keep me from making the costly mistakes that destroy most people's portfolios. When I remind myself "we are investors, not speculators", it stops me from chasing hot stocks or trying to time the market based on emotions or hype. Focusing on "present value of future cash flows" forces me to look at actual numbers instead of getting caught up in exciting stories about what a company might do someday.
The rule about only investing in what I understand has saved me countless times from putting money into complex businesses or trendy sectors that I can't properly evaluate - if I can't explain how a company makes money, I have no business owning it. Remembering that the market is a "voting machine" in the short term but a "weighing machine" long-term helps me ignore daily price swings and focus on fundamental business value, preventing panic selling during downturns or euphoric buying during bubbles. And that final principle - that great stories can become bad investments at the wrong price - is probably the most important tenet of all, because it stops me from overpaying for even fantastic companies just because I love their potential.
Together, these tenets force me to think logically rather than emotionally, focus on facts rather than feelings, and make decisions based on value rather than momentum - which is exactly how you avoid the expensive mistakes that turn investing into gambling.
