Law 1: Don't lose check
The fundamental principle of investing according to Warren Buffet and author Phil Town is "never lose coin." Regulation Figure 2 is "always elicit Enactment Figure 1." Town follows many of Buffet's investment strategies to accomplish undeniable he remembers Principle Numeral 1.
Instructions
You shouldn't fall in love with a company. When the numbers reveal the business is not doing well, it's time to sell the stock and look for other opportunities.
2. Look for a moat. Just like a moat was built to protect a castle or fort, a moat in the Rule Number 1 sense is a competitive advantage. For instance, Google's proprietary search engine technology is a moat to protect it from competition.
3. Make sure the Big 5 numbers are good and growing. The Big 5 numbers are Return on Investment Capital, Sales Growth Rate, Earnings Per Share Growth Rate, Book Value and Free Cash Flow.
4. Bet on the jockey. You want to be confident that the management in place can lead this company successfully in the future.
5. Know the right time to sell.
