Every business you own is subject to change—rapid or gradual—and you need management teams thinking ahead about how their models must adapt.
Slow (“invisible”) change can be even more dangerous than rapid change because it lulls you into complacency.
Stay Within Your Circle of Competence
Be brutally honest about what you understand deeply versus what you don’t—and resist the urge to stray into areas where your knowledge is weak.
Leverage outside perspectives (trusted friends, partners) to help you identify blind spots in your own expertise.
Intrinsic Value Trumps Market Price
Focus on the present value of all future cash flows (i.e. private‐business value), not short-term earnings or “comps” to indexes.
Qualitative factors (brand strength, management quality) matter as much as quantitative inputs in estimating value.
Don’t Fear Concentration (If You’re Right)
A small number of big positions in your highest‐conviction ideas can outperform a broad, unfocused portfolio—provided the price is attractive.
That said, size constraints inevitably push you toward larger businesses over time; adapt your approach as your capital base grows.
Mistakes Are Your Greatest Teachers
You will make significant errors; what counts is how quickly and effectively you “scramble out” of them and redeploy capital.
Avoid “bet‐the‐company” gambles; mistakes should be manageable, so you can learn without risking the whole enterprise.
Buy Durable Moats, But Price Matters
Owning businesses with strong competitive advantages (brands, network effects, scale) is powerful—just insist on paying a rational price.
Even “moaty” businesses (e.g. Coke, AmEx) face disruption; always ask what could undermine their franchise and build that into your valuation.
Cash-Light, Asset-Light Businesses Thrive in Inflation
If you can buy once (brand, royalty stream, real estate bought long ago) and not keep plowing in more capital, you benefit from inflation.
Capital-intensive businesses (utilities, railroads) constantly need more reinvestment and can see their “real” returns eroded by rising replacement costs.
Patience Beats Aggression
When deploying big sums, you can wait months or years for the right deal—don’t let “analyst impatience” drive you into overpriced opportunities.
If cash piles up, consider share repurchases only when stock is clearly undervalued; otherwise, better to bankroll new acquisitions at fair prices.
Management Quality Is Paramount
You want operators who treat “their” business as if they’ll own it forever, obsess over costs and customers, and honestly confront risks.
A culture of integrity and long-term thinking at the top cascades through the entire organization, minimizing the chance of catastrophes.
Stay Rational—It’s a Moral Imperative
Continually strip away avoidable ignorance; it’s not just smart, it’s honorable to update your beliefs in light of new facts.
Emotional equanimity—never getting too exuberant in booms or too despondent in busts—is your greatest competitive advantage in markets driven by fear and greed.
You will make big errors: Even Buffett admits the Energy Future bet was “a significant mistake.” Owning up to that upfront normalizes error as part of the process.
Scramble out of them: The ability to pivot—selling Hutzler’s or exiting near-bust GEICO—turned disasters into multi-billion-dollar opportunities.
2. Always Anticipate Disruption
Constantly ask “What can mess up our model?”: From drilling tech flattening gas prices to ride-sharing upending taxis, every business must plan for game-changing innovation.
Adapt relentlessly: GEICO’s evolution from mail to phone to Internet to social media shows that even “stable” models need ongoing reinvention.
3. Focus on Intrinsic Value, Not Benchmarks
Value = PV of all future cash flows: True worth is what a business will distribute over its lifetime, not the next quarter’s earnings.
Ignore stock-index theatrics: Buffett continues to compare his book-value growth to the S&P as a “self-inflicted hair shirt,” not a rational exercise—but it enforces discipline.
4. Think Like an Owner, Not a Trader
Buy 100% of a business in miniature: Evaluate companies as if you’re buying the whole thing—ask “What will this look like in 5–10 years?” not “What’s its P/E today?”
Size matters: At Berkshire’s scale, focus on large deals (railroads, utilities, Heinz) that move the needle; smaller bolt-ons are fine but won’t define your growth.
5. Leverage Relationships & Reputation
A “Buffett stamp” opens doors: Long-standing personal credibility helped land Heinz and crisis-era bank investments when trust was at a premium.
Deserve good partners: The 3G deal shows that treating partners well attracts the best—“if you deserve a great spouse, you’ll find one.”
6. Deploy Capital Where You’ll Earn High Returns
Seek predictable, fair-regulated returns: MidAmerican’s sub-1% ROA looks weak only because it’s a growing utility—earnings are reinvested at regulatory-guaranteed% returns.
Don’t over-leverage for cheap thrills: Buffett avoids buying small, overly cyclical businesses with high financing risk; he prefers steady “iron-clad” assets.
7. Favor Individuals, Not Just Corporate Fines
Prosecute the human actors: Chasing individuals for malfeasance changes behavior far more than corporate fines ever will.
Protect your culture: With 300,000 employees, occasional wrongdoing is inevitable—early detection and personal accountability safeguard reputation.
8. Keep “Dry Powder,” But Use It
Extra cash is a built-in problem: At some point Berkshire will have more cash than smart uses—but that’ll be a good problem to solve with buybacks or big deals.
Be patient: Buffett’s “big elephant” approach means waiting for the right $20–$50 billion opportunity, rather than forcing smaller deals.
9. Government Has a Role in Fragile Markets
30-year fixed mortgages need a backstop: Mortgages can’t be entirely privatized—GSEs fill a critical gap that private capital couldn’t cover.
Beware dual incentives: Fannie/Freddie strayed chasing returns—keeping portfolio activities out of GSEs would restore focus on their housing-support mission.
10. Teach Financial Literacy Early
Habits form young: Instilling basic money skills—saving, budgeting, understanding credit—in grade school prevents lifelong pitfalls.
Schools must step up: Buffett applauds “Secret Millionaire’s Club” and calls for integrating financial basics into the core curriculum ASAP.
Love the game: Buffett emphasizes that to excel you must absolutely enjoy every minute of investing—passion fuels the intensity (“Intensity is the price of excellence”).
Sustain your drive: Even after decades and billions managed, he still relishes the hunt for new opportunities, proving that enthusiasm need not wane with size or age.
2. Business, Not Stock, Analysis
Think like an owner: Evaluate a company as if you’re buying the entire business—focus on long-term earnings power, competitive position, and management quality—not just ratios.
Customize your lens: Different sectors demand different metrics; banks, insurers, manufacturers and brands all require unique analyses beyond simple screens.
3. Intrinsic Value Over Macros
Ignore macro forecasts: Buffett and Munger rarely discuss GDP or “new normals”—they focus on the economics of individual businesses they understand.
Own durable moats: Seek companies with strong, sustainable competitive advantages (e.g. Coca-Cola, BNSF) you can predict with confidence 10+ years out.
4. Pay What It Takes for Quality
Reluctant overpayment: If a business’s future earns far more than its cost of capital, it often pays to “gag” and stretch for the price, since great economics can justify a premium.
Hunger for scale: The best businesses can profitably reinvest capital—willingness to “pay up” keeps you in the ones that can grow.
5. Thrift vs. Tax & Stimulus
Be prudent but pragmatic: Buffett rails against big deficits, yet recognizes the necessity of stimulus post-2008 panic—timing and scale matter more than abstract thrift.
Blend politics & prudence: He’s non-partisan in the boardroom but clear that runaway debts and bad incentives (e.g. pre-crisis housing policies) carry real costs.
6. Cash Isn’t King Today
Low-rate trap: In a near-zero rate world, savers lose purchasing power; Buffett recommends sticking with low-priced equities or well-run businesses rather than cash.
Equity vs. fixed income: Historically, businesses outperform fixed-dollars over time—own productive assets if you can stomach volatility.
7. Float Is a Hidden Goldmine
Insurance float: Berkshire’s sub-zero cost float (money held before claims) is akin to cheap, permanent capital—key driver of Berkshire’s returns.
Honest conservatism: Build in “pessimistic bias” in loss reserves to insulate against climate risks or unexpected catastrophes.
8. Culture & Autonomy Create Moats
Decentralize decisively: Subsidiaries run autonomously—no forced “cross-selling” or centralized mandates—so managers feel truly in charge.
Perpetuate the right DNA: A non-executive chairman (Howard Buffett) will safeguard Berkshire’s unique culture long-term, enabling smooth CEO transitions.
9. Read Widely & Study Folly
Learn from history: Buffett devours stories of past financial disasters (e.g. 1901 Northern Pacific corner) to understand human error, not sigma-based risk models.
Edge through psychology: IQ & math aren’t enough—understanding how people behave in booms and panics gives you a sustainable advantage.
10. Say No to Complexity & Fads
Avoid new issues & high fees: Buffett hasn’t bought an IPO in decades—promoted offerings with big commissions rarely justify the hype.
Ignore hot categories: He never targets specific countries, sectors or themes—only businesses he truly comprehends at sensible prices.
Prioritize profitability over sheer scale: At Gen Re, Buffett & Munger cut unprofitable “accommodation” business, even at the cost of halving premiums, to restore underwriting discipline.
Don’t hesitate to overhaul: True turnaround sometimes means a “major fix-up operation”—firing or refocusing teams until the right culture sticks.
2. Entrench the Right Culture for Succession
Autonomy breeds loyalty: By letting managers “paint their own painting,” Berkshire keeps talented operators happy and unlikely to leave, even post-Buffett.
Guard your unique culture: Size and concentrated shareholding make hostile takeovers virtually impossible; culture becomes its own moat.
3. Invest in Capital-Intensive Businesses That Earn ≥ Cost of Capital
Accept lower ROIC if sustainable: Utilities or railroads earning ~12% on retained capital can be as attractive as cash-rich businesses, provided returns exceed cost.
Float is a lever: When float costs less than zero, even modest underwriting returns amplify equity ROI.
4. Expect Float Growth to Slow and Run Off
Plan for natural runoff: Retroactive reinsurance contracts “melt away” over time—don’t assume perpetual 20%+ growth.
Keep hunting smarter float: Even if headline float plateaus, you can still find niche deals that add low-cost float incrementally.
5. Steer Clear of Declining Businesses—Unless They’re Dirt Cheap
Avoid “cigar butt” investing: Declining industries (e.g., encyclopedias, newspapers) rarely reward new entrants—best to pass unless price is so low risk/reward is compelling.
Pick your exceptions wisely: If you do own a downturn business (e.g., newspapers), you must understand its long-run economics better than most.
6. Ignore New Issues & High-Commission Offerings
Never chase IPOs: If a seller picks the timing, odds are the new issue won’t outperform a vast universe of un-promoted shares.
Avoid products with embedded “ratchet” fees: Any opportunity that pays brokers 5–7% up front can’t be the cheapest use of your capital.
7. Incentives: Autonomy + Partnership
Tailor pay to business: No one-size-fits-all formula—each subsidiary’s comp plan reflects its unique economics (e.g., GEICO, reinsurance, investment teams).
Align partners, not principals: Todd Combs & Ted Weschler share 20% of each other’s performance to foster collaboration, not turf wars.
8. Beware False Precision in Risk Models
Don’t worship “sigma”: Heavy reliance on statistical (Gaussian) forecasts blinds you to fat‐tail events—Berkshire prefers mental worst-case thinking.
Margin of safety > fancy math: Build in conservatism so you never risk what you can’t afford to lose, even if it “penalizes” short-term returns.
9. Retain Earnings When You Can Compound >100% ROI
Buybacks vs dividends: If every dollar left in Berkshire turns into more than $1, shareholders are better off than receiving a dividend.
Redeploy cash at an edge: Whether buying Lubrizol or expanding utilities, prioritize internal redeployment over cash payouts.
10. Read Widely, Learn from Others’ Folly
Study financial history: Obsessively reading past disasters (e.g., 1901 Northern Pacific corner) teaches far more than any risk model.
Continuous learning trumps IQ: Over decades, Buffett & Munger gained more edge by understanding human nature and error patterns than by raw smarts alone.
Even great businesses (e.g. BYD) can become overvalued—if you still believe in the long-term fundamentals, expect short-term glitches and stay the course.
The cheaper the entry price relative to intrinsic value, the larger your margin of safety; once you’ve paid up, patience—not headstrong buying—is your best defense.
Speculating in Commodities Is a Tough Game
If you can reliably predict oil (or any commodity) prices, you shouldn’t be running complex businesses—you’d just sit in a room trading commodities.
Instead, focus on productive assets (railroads, insurers, manufacturers) where you can identify durable competitive advantages.
Don’t Hedge Commodities at the Parent Level
Berkshire’s policy is to let its operating subsidiaries hedge their own commodity exposures—but the parent company doesn’t try to “guess” oil, copper, or cotton prices.
If you think you can forecast a commodity’s direction over the next year, odds are you don’t have an edge; better to invest in businesses you understand.
Align Incentives by Making Stakes Meaningful
CEOs of systemically important firms should have “skin in the game” on both the upside and downside—ideally risking personal wealth if their firms become “too big to fail.”
Executive comp in companies you’d never sell should be tied to real value creation, with option strike prices set at pre-deal intrinsic values.
Maintain a Chief Risk Officer Mindset
Always ask yourself: “Could any one event or business I own blow up Berkshire?” If so, rethink the bet.
It’s better to earn low single-digit returns on float safely than chase outsized returns through leverage or exotic derivatives.
Don’t Let Past Deals Blind You to New Opportunities
Resist the trap of comparing every new deal to your absolute best—your goal is to do the best you can today, not beat your own record.
Market conditions and opportunity costs change, so treat each acquisition as a standalone decision.
Evaluate Businesses on Tangible Returns, Not Goodwill
When judging a business’s quality, look at pre-tax returns on net tangible assets—goodwill obscures the real economics.
When judging your capital allocation, include goodwill paid (i.e. the full purchase price) to see whether you truly earned a satisfactory return.
Be Skeptical of Long-Term Projections
Formal multi-year earnings forecasts carry a false precision; people with projections tend to assume constant growth even in downturns.
Instead, build mental models with plausible ranges—focus on the reliability of the business, not a spreadsheet’s line items out to year 10.
Keep Powder Dry—Cash Is a Strategic Asset
Short-term rates may be miserable, but Treasury bills give you instant firepower when attractive deals pop up (e.g., pipeline buyouts on weekends).
Never chase extra basis points with commercial paper or fancy instruments if it compromises your ability to move quickly on big opportunities.
Commit to Lifelong Learning Through Reading
Communication skills—orally and in writing—are the foundation of persuading, negotiating, and understanding complex businesses.
Read widely and deeply (annual reports, books, newspapers); even if you’re not fast, consistent reading compounds your knowledge over decades.
1. Speak out responsibly—welcome dissent, but own your words
Healthy debate matters: Calling out problems (long or short) keeps markets honest—just be ready to stand behind every claim you make.
Beware unethical tactics: Spreading falsehoods—on either side—can wreck reputations and should be (and sometimes is) illegal.
2. Autonomy trumps forced synergies
Subsidiary freedom: Let your operating teams run their own businesses—micromanaging cross-selling or vendor “mandates” often backfires.
Organic cooperation wins: When two units choose to work together, that bond is stronger than any top-down edict.
3. Hire people who act like owners
Owner mindset is rare: Look for managers who think “I own this business”—they’ll work harder and care more than any rear-view metric.
Minimize formal contracts: Too many caveats and clawbacks breed mistrust; align incentives simply, then step back.
4. Retain earnings only when they earn more than 1× their cost—but measure properly
Presence of value > price: Only plow back cash if each $1 retained is likely to create > $1 in present-value terms.
Beware simple five-year price tests: Market gyrations can make perfectly good investments “fail” short-term formulae; use long-term PV calculations.
5. Don’t try to solve society’s ills by hiring—it misallocates capital
Social safety nets belong to government: Private firms shouldn’t create make-work jobs—they’ll soon collapse under inefficiency.
Hire only when work exists: Bringing people on “just to employ” without a productive role hurts both them and the business.
6. Stick to what you can control—own the whole cake when you can
Full ownership beats minority stakes: You’ll work harder and move faster when you can make all the calls—hence passing on markets (China, India) where you can’t own 100 %.
Regulatory limits are real costs: If you can’t tilt the playing-field rules yourself, don’t expect to build the same moat.
7. Clear, audience-focused communication builds lasting trust
Write for “two smart outsiders”: Buffet’s “Dear Doris and Bertie” approach ensures even non-pros read, understand, and stay loyal.
Trim the noise: If a report needs 100 pages of footnotes, it’s probably hiding more than it reveals—brevity and clarity win.
8. Pragmatism is the true “philosophy” of success
Repeat what works: There is no single creed—just observe results, keep the good habits, jettison the rest.
Temperament matters: Logical consistency and self-discipline beat clever theory every time.
9. Be fearful when others are greedy—and vice versa
Embrace volatility: If you panic when markets swoon, you’ll never buy low (or sell high).
Cultivate independent courage: Rely on your own circle of competence, not the headlines, to guide big moves.
10. Shared hardship can beat mass layoffs for morale (and returns)
Some businesses cut hours before people: When revenue dips, sharing the burden keeps your team intact and ready for the rebound.
Loyalty pays dividends: Employees who stick through tough times often drive the strongest recoveries.
1. There’s only one kind of investing—value investing
Value ≠ “style”: Buffett rejects the growth vs. value label—every investment must deliver more cash than you pay today.
Never pay up: If the price isn’t well below your estimate of intrinsic value, it isn’t a value play—period.
2. Buy simple businesses at wide discounts—skip needless “due diligence”
Fat-margin test: If a company’s worth is two-to-three times its market cap, you don’t need a 1,000-page audit—just buy.
Kill the precision trap: Needing “three-decimal” accuracy to decide means the opportunity isn’t fat enough to pursue.
3. Stick to your circle of competence—and expand it sparingly
Deep knowledge trumps breadth: You can move fast and confidently only in industries and business models you truly understand.
Learn from exceptional management: When someone—like BYD’s Wang Chuanfu—demonstrates rare execution, it can justify carefully stretching your circle.
4. Build and value your margin of safety—float is a competitive edge
Insurance float as cheap leverage: Buffett treats long-duration float (e.g. Swiss Re, Q1 results) as zero-cost capital to deploy in attractively priced deals.
Keep ample cash: Parent-level cash ensures you can pounce on ideas quickly—even in downturns.
5. Fortress balance sheet—culture matters more than credit ratings
Credit culture over checklists: No model or committee can substitute for a DNA-driven aversion to risk—and a sacred promise to meet obligations.
Ratings are noisy: Losing a Moody’s AAA may bruise bragging rights but rarely changes true cost of capital.
6. Act decisively—speed is a sustainable advantage
Five-minute filter: If you can’t decide in minutes whether you understand it enough to act, you won’t in months.
One-call financing: The ability to make firm bids (Constellation, Dynegy) overnight—and close them without six lawyers—draws sellers and deters rivals.
7. Buy to hold—avoid artificial portfolio gymnastics
No spin-offs: Chasing one-time multiple boosts via carve-outs destroys the long-term home for great businesses and wastes shareholder capital.
Marriage of equals: When you buy a family-run or founder-led business, promise permanence—contracts won’t retain passion the way assurance of “here to stay” will.
8. Own up to mistakes—internal post-mortems, not public shaming
Admit and correct: Buffett was “dead wrong” on Gen Re’s reserves, but fixing it (via Montross and Brandon) turned it around.
Keep critiques private: Public blow-by-blow on missteps shies away sellers and undermines managers doing their best to recover.
9. Incentives and culture—trust over contracts, shame over legislation
Seamless web of trust: Rather than 100-page comp plans, Berkshire leans on alignment and reputation to keep managers honest.
Investors as referees: A handful of large institutions speaking out on the truly outrageous pay packages—and the ensuing media embarrassment—beats convoluted laws that backfire.
10. Be long-term optimistic—capitalism works, despite the bumps
Cycles don’t erase progress: Fires, wars, panics and recessions punctuate—but do not derail—an economy that keeps doubling living standards every few decades.
Big problems, bigger solutions: From wind and solar (MidAmerican) to batteries (BYD), human ingenuity—and patient capital—will conquer the “main technical problem of mankind.”
Each of these reflects Buffett’s core: never lose sight of margin of safety, act only where you understand, prize integrity and culture over cleverness, and keep a multi-decade time horizon.
“Too big to manage” means too big to trust: If you can’t fully grasp your firm’s exposures—even under extreme but plausible scenarios—you’re running unacceptable risk. Buffett insists on “none” rather than “slim” chance of ruin.
Chief Risk Officer mindset: He sees himself as Berkshire’s CRO; risk management can’t be delegated to committees or opaque models promising “once-in-a-lifetime” safety.
2. Skip endless due diligence when value is obvious
Simple “fatness” test: If a company’s intrinsic value is many multiples above its market price (e.g. PetroChina at ~$100 B vs. $35 B), detailed micromanagement adds no insight—buy.
Avoid precision traps: If you need three-decimal accuracy to decide, the idea isn’t a “fat” opportunity. Buffett moves only when the margin is so wide that further analysis is wasted.
3. Value speed and decisiveness
Five-minute filter: If Buffett can’t decide within minutes whether an opportunity is in his circle of competence, he won’t spend months—it simply won’t pan out.
Be ruthlessly selective: He “rules out” entire swaths (startups, complex derivatives, unfamiliar fields) so he can act instantly on what remains.
4. Pay dividends only when no better use exists
Retain only if ROI > 1×: Every dollar retained must generate more than a dollar in present-value market value; otherwise it should be distributed.
Match payout to business needs: Operating subsidiaries (like See’s Candy) pay out all excess earnings; Berkshire holds capital centrally to redeploy where it earns best.
5. Build a fortress balance sheet over chasing extra returns
Focus on avoiding ruin: Buffett trades off some upside in exchange for near-zero “tail risk”—better to earn a reasonable return without jeopardy than chase outsized gains with leverage.
Double-layered protection: High credit standing (so borrowing isn’t needed) plus ample liquidity that would keep the company running smoothly even if funding markets froze.
6. Understand what you own—lump non-specialized cases
Group approach when no edge exists: In areas like big pharma, where individual pipelines are unpredictable, buying a basket of well-priced names makes sense.
Pick individual when you do know: Conversely, in banks or consumer brands, Buffett studies management DNA and moat quality one by one—never lump them all together.
7. Seek managers with DNA averse to hidden risks
Genetically risk-programmed leaders: Buffett’s heir-apparent criteria: integrity + analytical savvy + a nose for unmodeled perils.
Resist groupthink: High-powered teams chase yield and ignore low-probability blow-ups; Buffett looks for CEOs who say “no” when others shout “yes.”
8. Cultivate a long-term, decentralized culture
Simple process, big commitment: At Berkshire, a direct “yes” means funding will show up—no “material adverse clauses” or 100 lawyer memos—so partners trust the outcome.
Preserve autonomy & alignment: Subsidiary managers keep control over operations and capital, incentivized to think like owners.
9. Don’t let cleverness mask absurdity
Beware of “financial mass destruction”: Complex CDO² or synthetic instruments are often so convoluted that valuing them requires reading half-a-million pages—Buffett labels that “madness.”
Fair-value discipline: Even imperfect market marks force transparency; booking assets at cost or fanciful models invites hidden losses and systemic surprise.
10. Keep your circle of competence small and focused
Say “no” early and often: Buffett and Munger bluntly cut off pitches as soon as they know it’s outside their scope—saving time and mental bandwidth.
Expand your arena selectively: They only add industries where they can genuinely understand the economics, not just chase hot trends.
Don’t chase the latest “hot” sector just because it’s in vogue—your edge comes from what you understand, not the area’s hype.
A narrow mandate (e.g. only bonds or futures) handicaps you; the best “fund” is one with the freedom to deploy capital wherever your intellect finds an edge.
2. Read voraciously and avoid catastrophes.
The single best investment you can make early on is in your own knowledge—devour annual reports, industry studies, and high-caliber mentors.
Cultivate an “aversion to big losses”: your long-term returns come more from avoiding disasters than from landing home-runs.
3. Volatility is not risk.
Price swings (beta) quantify volatility but do not measure your true exposure to permanent loss of capital.
True risk comes from misjudging a business’s economics or management—not from short-term market gyrations.
4. Play within your circle of competence and insist on a margin of safety.
If you don’t fully understand a business—or it’s “too hard”—park it in your “too difficult” file and move on.
A superior business merits a smaller discount; a mediocre one requires a larger cushion between price and intrinsic value.
5. Management quality and integrity are vital.
Annual reports (and the tone of a CEO’s shareholder letter) reveal more than slick presentations—look for candor and substance, not spin.
If leaders habitually bend the truth in small matters, don’t trust them with your capital in big ones.
6. Think in terms of opportunity cost, not fixed hurdle rates.
Compare every prospective investment to what you’d otherwise do with the cash—if a bond yields 5%, you need a business that can comfortably beat that over time.
Don’t fetishize a single “hurdle rate”; instead, rank your options and deploy capital where the gap between expected return and alternative is widest.
7. Size constraints limit your universe.
As your war chest grows, you naturally can’t invest in tiny, high-return niches—big sums demand big, liquid opportunities.
Before committing billions, make sure there’s enough trading volume (or asset size) so you’re not moving the market against yourself.
8. Equities over bonds, but with tempered expectations.
In a low-yield world, stocks still offer the best long-term upside versus fixed income—but don’t expect the “glory days” of 17% annual returns.
Prepare for modest equity gains above what high-quality bonds deliver; don’t gamble on the market going parabolic.
9. The discipline of the “too difficult” pile.
Whenever an idea demands more work or insight than you’re ready to invest, file it under “too difficult” and revisit later if still compelling.
Focus your effort on a handful of high-conviction ideas rather than half-baked “promises” that overpromise easy money.
10. Portfolio review is ongoing—but needn’t be frantic.
When capital is scarce versus ideas, you’re always sizing up what to buy next and what least attractive position to trim.
Once your cash exceeds opportunities, you shift to monitoring existing holdings for material changes and stand ready to act if truly compelling ideas emerge.
