Charlie Munger, the long-time investing sidekick of Warren Buffett, has shared plenty of wisdom over the years on the markets and life in general.
One of my favourite Mungerisms is this: “Tell me where I’m going to die, that is, so I don’t go there.” This illustrates the importance of negative knowledge – the knowledge of what not to do.
With that, I’d like to share a list of “Don’ts” in investing that I’ve been using for years. This list is something that has been very helpful for me in generating solid returns in my own personal portfolio, and for The Motley Fool Singapore’s stock recommendation services. Without further ado:
- Don’t jump in and out of stocks
- Don’t assume that a stock that has fallen hard can’t fall anymore
- Don’t underestimate the power of simply holding onto stocks
- Don’t blindly invest in a company just because its stock looks cheap
- Don’t overpay for a company’s shares
- Don’t pay too much attention to what the economy is doing
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