Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1”.

This quote by Warren Buffet is a simplified version Benjamin Graham definition for investing which is:

The only way to never lose money in the market is to

1. Identify the right investment instrument/product that is suitable for your strategy

2. Have a proper financial and investment plan to facilitate your implementation

By doing so, you should be able to ride through the ups and downs of the market and profit from the underlying growth of your investments. (e.g. growth of earnings)

Screw up either part and chances are you will suffer losses from your investment operation.

Examples of a poor investment operation include:

1. Selling off your investments at the worst possible time because you need money

2. investing in something that has no inherent value and holding it for a long time

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

The price of investments is always driven by market demand and supply.

Humans are emotional creatures but we are certainly not dumb.

In the short run, even shit can be sold at the price of gold but in the long run, people will gradually come to understand the fundamental value of an investment and price it accordingly.

As an investor, we should always focus on the fundamentals of the investment and understand the actual worth/potential in the long run instead of being influenced by blind price fluctuation in the short run.

Remember, price is what you pay, value is what you get.

"If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

I cannot stress enough the importance of long term investing.

Long term investing is beneficial to your investment operation as:

1. it enables you to reap the effects of compounding

2. it eliminates the effects of short-term price fluctuations