Don’t Buy Just Because It’s Undervalued

Always remember to assess a company's fundamental first and make sure they pass your investment criteria before you find their real business value. Do not immediately jump to calculate a company's intrinsic value and buy just because it's undervalue. 

Understand that a company may be undervalue because their business is deteriorating or it's just a plain bad business. As what Warren Buffett said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Check the Company’s Business

Stop looking at a company's share price and start thinking like a business owner. Focus on their business and company's fundamentals. We can control which company to add into our portfolio but we can't control their share price. The stock market doesn't know who you are and doesn't care what you want. Understand that as long as you did your best to buy high quality companies for your portfolio, their share price will take care of itself. 

Stock Price Will Follow Company Fundamentals

The law of the stock market dictates that the intrinsic value of a company will almost always acts like a gravity by pulling the share price to match their business value in the long term. Like what Benjamin Graham said, "In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

Temporary or Permanent Problem

I love it when wonderful companies in my watchlist suddenly have bad news or lands into temporary trouble. This is a great opportunity for me because this is the only time the market will panic and sell off their shares to me at dirt cheap prices due to fear... or well, pure stupidity. Like Warren Buffett said, "The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they are on the operating table."

Focus On the Company’s Fundamentals

Stop looking at the share price movement or pattern to make your buy or sell decision of a company. The share price says nothing at all about the company. As a value investor, we focus on the business, company fundamentals and its intrinsic value. Buy with a margin of safety and let the company compound your wealth for the long term.

Invest for the Long-Term

The beauty of investing is 1,000 investors can be in the same great stock company and their returns will be dramatically different. Finding a great company isn't even half the battle. Price matters. Time horizon matters. Temperament matters. Conviction matters.

Keep things simple. Far too many people want to complicate stock investing. They think there are some secret techniques or strategies that can instantly make them a millionaire. Throw this idea out of the window please. Just follow the basics and what works. Action does not equals to result in stock investing. The big money is in the waiting. Wealth creation is long term. Warren Buffett is rich but no one wants to follow his way because he said nobody wants to get rich slow. So let's get rich slowly but surely.