The largest investors follow a number of different systems, but the underlying principles are generally similar and surprisingly simple. Here’s what you learn from their advice:
1) “Buy when blood in the streets.” – Baron de Rothschild
Everyone thinks they know it. Almost no one really follows. If your portfolio is leaking like the Titanic, why you should buy more? Wait a few months, and you’ll usually be able to see why. Another good way to measure the time to buy is that it feels awful. If you feel too good about a stock, check your numbers. It is easy to feel good when things are going, and high, but the long-term results may be disappointing.
2) “purchase of a business any fool can run because sooner or later, any idiot should be executed.” – Peter Lynch
Companies with little competition and high profit margins can be done by anyone. Those who have require a lot of competition and low margins Engineering Management. Stick with simple cases. Not only is it likely to do better, but you will find it easier to decide to sell and when. “Never in something you do not invest to illustrate with a crayon,” said Lynch. It is always great advice.
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