What does Warren Buffett mean when he says: Don’t lose money?
For me it means as follows:
01. Don’t speculate or gamble
Gamblers or speculators lose money in the long term although there are occasional gains because of luck. The odds in gambling are always in favour of the House or Banker. That’s why all gamblers, except the professional ones, make money in gambling. Ask yourself. Are you a professional gambler?
02. Don’t listen to insiders
If you think that insiders are keen to make outsiders rich, you are being naive. Insider trading is an offence. Why should an insider take risk of being prosecuted by giving you, an outsider, inside information to make money? Many people are impoverished by what is called an inside tip. Be extra careful especially when the tip is said to come from the horse’s month.
03. Don’t buy what you don’t understand
Many people like to tag along with their friends. They buy I buy. This is not a good idea. Your must know what you are buying.
04. Don’t play with borrowed money
Play within your comfort zone. Playing with borrowed money will make you edgy. Fear causes irrationality. When you are irrational you are likely to make mistakes that are costly.
05. Avoid rubbish shares.
Shares with high borrowings and little or no earnings and no dividend yields are too risky to get involved. All companies that fold are those with high debits they cannot service.
06. Insist on value when you buy
Everything has a fair price. To be safe, limit your purchases only to stocks with strong balance sheet, good cash flow, and good growth potential at undervalued prices. Buy dollar notes for 50 sen as advised by Benjamin Graham, the great legendary investor.
07. Timing is everything
Warren Buffett calls this: The perfect pitch. You will do well to wait for a golden opportunity before you act. Most people do not have the patience to wait. They act in haste and lose money.
08. You can’t win without knowledge and wisdom
“How can the unarmed go into a mortal combat and hope to escape unscathed /James Dine.” The stock market is a battlefield wherein are professionals working full time playing against you. Are you good enough playing against them? No way, right? Never overestimate your own ability.
The opinion stated above are my own. You may disagree. But if you wish to learn more, you may join me in my Telegram Super Group where you may voice your opinion, share your knowledge and experience, and concur with other members for mutual benefits. What you need to do is to install Telegram into your mobile phone and pm me. My phone number is: 016 9321849.
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