Reblog: 100 Common Threads of the Investment Masters

The Investment Masters Class is based on the wisdom of the world’s greatest investors. Over the last few decades following investors with strong track records of compounding capital I’ve found that many common threads consistently surface. These common threads encompass a broad range of areas such as investor’s goals, processes, opportunities, obstacles, psychological construct, outlook and market views. Many are timeless. Below are 100 common threads of the Investment Masters which form the foundation of the Investment Masters Class tutorials.

The Number One Rule is don’t lose money
Harnessing the power of compounding is the key to investment success
It’s better to be street smart than book smart when it comes to the market
Investing is an art, study the Masters
There are no get quick rich schemes, NIL, ZILCH
Successful investing is hard work
The Investment Masters read
Continuous learning is one of the keys to successful investing

As an Investor, you must know what your edge is
The Investment Masters love their jobs
Checklists help avoid human biases
Studying history gives you an edge, most things have happened before
All Investors make mistakes, the Investment Masters learn from theirs and others
Being an Investment Generalist helps one widen the scope of view
Understand what you own
Value Investors dominate the Investment Masters ranks
Prices maybe wrong
Risk and return are not correlated
Volatility is NOT risk. Volatility creates opportunities
Cash is an asset in a portfolio
Investment Masters understand the folly of forecasts
Don’t forget, markets can turn on a dime
Pessimism can be a clarion call
Weak markets set the stage for high returns
Ignore tips
Investment Masters don’t stray outside their circle of competence
Outperforming in down markets is the key to investment success
No Index Hugger has made the Investment Masters Hall of Fame
Only an Absolute Return focus is consistent with the First Rule of Investing: Preserve Capital
The Investment Masters get on base [rather than hit home-runs]
Valuation is a range not a number
Don’t invest without a Margin Of Safety
Opportunities arise when prices don’t reflect Private Market Value
Having a longer Time Horizon can give you an investment edge
Never assume interest rates will stay low indefinitely
Find Compounding Machines
The Investment Masters count the Cash coming out of the business
Don’t waste your time trying to pick the bottom
Testing Investment Ideas helps identify where a thesis may be wrong
Don’t let your investments go stale
Never forget things are always evolving
High levels of Correlation can lead to trouble
The Investment Master looks at less and sees more, because his Unconscious skill set is much more highly evolved
The greatest Investment Master of our time thinks the Efficient Market Hypothesis is garbage. Most Business Schools study the hypothesis not the Master”
Shorts can help protect capital, but the analysis of shorts differs significantly than for longs
You need to understand the benefits and pitfalls of Diversification
Focus on the Variables that are going to drive or destroy a company
There is no One Size fits all. Positions should be sized depending on a multitude of factors
Portfolio management is a LOT more than picking the right stocks
Management can break a company
Understanding Psychology can be the most important thing
The key to successful investing is overcoming your Emotions
The market humbles everyone
All you need is a little Patience
Don’t fall in Love with three letters
It’s Mr Market who provides the opportunities for high compound returns
The more people you have the more likely you will suffer from Groupthink
Human nature evolved for the survival of the species, not individual investors
It’s important to understand the Bounds of your Knowledge
When people Hate a stock, there’s more chance it’s going to be mis-priced
The Investment Masters use Leverage sparingly if at all
Excessive Debt on a company’s balance sheet can lead to investment ruin
Be on the lookout for Value Traps
The higher the rating the higher the potential for de-rating
There are Bubbles everywhere, be careful
The Investment Masters are the only Crowd you should follow
Don’t put your faith in a Computer Model, keep thinking
Make sure you keep your eyes on the road ahead or you might drive off a cliff
New Eras ordinarily turn out to be mirages
Ignore the Macro at your peril
What is RISK? … Permanent Loss of Capital
Don’t be unprepared for the Unexpected
You can drown in the absence of Liquidity
Capital Allocation is a required skill-set for Corporate Management
Be careful when companies are on an M&A binge
It’s Asymmetry that’s beautiful in investing
Trawl through the New Low Lists
Take notice of what Investment Masters are active in
Playing in Spin-offs can be profitable
Catalysts can speed up the crystallisation of profits
Invert [a thesis] so you don’t face plant
The Investment Masters seek Quality in their companies
In Win-Win situations, you’re less likely to lose
Industries that are Gonna Change the World for the positive may change your P&L for the negative
There is no margin of safety in Commodity Companies
The Investment Masters eat their Own Cooking
GOLD isn’t a compound[er]”
The Investment Masters age like a good wine
The dark art [of charting] is still practiced
Sometimes you need a removed view
Don’t confuse skill with luck
The scorecard is the P&L
Buy well
When it’s not working get off the Tracks
Conventional is Not Conservative and vice versa
Projects suffer from Time Asymmetry and Human Biases
Only at the right price, Buybacks add value
Evolutionary biases can kill you in the market
It’s important to understand the crowd behaviour in Bull Markets
Be mindful of Technological Obsolescence