Most of investing is sitting still. The investors who compound over decades are rarely the smartest in the room — they are the ones whose temperament holds when the market is loud, the news is bad, and everyone else is trading.
Superior returns do not come from superior information. They come from better behaviour applied consistently over long periods. The ten principles below describe that behaviour. None of them are complicated. All of them are difficult, because each runs against a strong human instinct — to act, to follow the crowd, to chase certainty where none exists.
01The ten principles
Be disciplined
Decisions are made against pre-determined rules — fundamental and technical. Not against emotion, headlines, or the opinions of others. No buying from fear of missing out. No selling in panic.
Invest only in what you understand
Every position sits within a circle of competence. Research is done first-hand; records are kept; tips from strangers are ignored. If the business cannot be explained in a paragraph, it cannot be owned.
Be patient & think long-term
Wealth compounds on decade-scale arithmetic. A stock that doubles over three years is a 26% annualised return. Most who fail at investing do so because they quit before compounding has time to work.
Buy slowly & sell even slower
Activity is not performance. If no great business trades at a great price, the correct action is to do nothing. The best positions are the ones held for years; the best client accounts are often the ones that were forgotten.
Focus on the business, not the price
In the short run, price is driven by sentiment and flows. In the long run, it converges on business fundamentals. Judge investments by how the underlying business is performing — let the market's short-term mispricing serve you, not instruct you.
Think independently
Most investors lose money by buying high and selling low — because they follow the crowd in both directions. Returns come from doing the opposite: being fearful when others are greedy, and greedy when others are fearful.
Never predict the market
The market cannot be reliably predicted, and trying to predict it encourages overriding your own rules. The job is not to forecast short-term direction. It is to own businesses that collectively grow under a wide range of economic conditions.
Ignore macro and geopolitical noise
Wars, elections, rate decisions, recessions — these are noise. They dominate the news and rarely change the intrinsic value of a good business. Macro and geopolitics should never be a reason to sell a great company.
Risk management & capital protection
Risk a small percentage of capital on any single investment. Diversify — there is no sure-win stock. A portfolio of great businesses bought below intrinsic value is extremely difficult to lose money on over time.
Take responsibility. Learn from mistakes
An investment becomes a mistake when the fundamentals have changed or the initial analysis was wrong. When that happens, sell — regardless of profit or loss — and redeploy into a better business. Never blame, never make excuses. Ownership keeps you in control of outcomes.
02Why discipline is the hardest principle
In a bull market, every principle feels optional. When speculative stocks rise 300% in a year and patient investors look slow by comparison, sticking to pre-set rules feels like a personal failing. It is during those moments — not during crashes — that most long-term underperformance is set up.
The reverse is also true. In a deep drawdown, the instinct to sell is almost physical. Holding through a 30% decline in a great business, or adding to it, takes more emotional capital than most investors have. The principles above exist to do that emotional work in advance, when the mind is calm.
If a 40% drop in a position you researched thoroughly would force you to sell, the position was too large — not the market too volatile. Size every holding so you can own it through an ordinary drawdown without changing your mind.
03What short-term price movements actually mean
Stock prices do not move smoothly with business value. They overshoot on the way up, undershoot on the way down, and spend most of their time somewhere in between. This is the feature, not the bug — it is what creates the opportunity to buy below intrinsic value.
A falling price in a strong business is a better entry, not a reason to exit. A rising price in a weak business is an invitation to leave, not to add. Confusing the two is the single most common error in investing, and the principles above are largely designed to make it harder to commit.
04Independence is not contrarianism
Thinking independently does not mean doing the opposite of the crowd on principle. It means forming your own view — based on the business, the price, and the evidence — and acting on that view whether or not anyone else agrees. Sometimes the independent view aligns with consensus. Sometimes it doesn't. The point is that the process is yours.
Five rules for temperament
- Decisions follow pre-determined rules, not emotions.
- Own only what you understand. Size it so you can hold it through drawdowns.
- Judge outcomes by business performance, not daily price action.
- Ignore macro and geopolitical noise as reasons to buy or sell.
- When the thesis breaks, own the mistake and redeploy. When it doesn't, sit still.