The investment world is changing rapidly, but the investment theory is new for a long time.Benjamin Graham used to say that there is no way to get rich overnight, and often the easiest way is the best way. He suggested that investors should have the right attitude, trust the judgment of common sense, think for themselves, and so on.

Principle 1: keep a correct attitude

The primary goal of value investors is to protect the principal and avoid losses. This simple logic warns us that some profitability can be sacrificed to ensure safety while controlling the cost of investment. When the rate of return on investment is not as good as that of your next-door neighbor, don't complain and let disappointment and discontent occupy your heart. Maybe your neighbor is taking a risk. As long as you still hold the principal and the rate of return increases steadily and reasonably, your assets can continue to grow. If you lose your principal, whether you save or invest, you lose the foundation of everything. Empty investment accounts will not grow in any way.

Principle 2: ignore predictions

Everyone has their own views on the economy, and many people like to recommend what they think are hot stocks to others. The discussion and debate on the stock market has reached a white-hot level. Oddly enough, in the face of the stock market rally, forecasters without exception believe that this situation will continue, while in the face of the stock market decline, everyone thinks that the stock market rally is a long way off. "I'm not going to estimate or predict at all. "that tends to give us the wrong impression of what is already clear," Buffett said. The more careful you are, the more nervous you will be.

We do not make any forecasts, but we are very concerned about and in-depth study of the company's historical performance record. If the performance record of the enterprise is not good, but the development prospect is very good, this is the opportunity. Charles Brandi believes that predicting investments will outweigh the gains, especially those promoted by analysts and media of investment companies. "people gather all the information out of interest in a certain result, which in itself has a certain degree of subconscious subjectivity, and the so-called accurate conclusion is precisely the Achilles' heel. They reminded me with Mark Twain's famous quote:'a mine is nothing more than a hole in the land owned by a group of liars.' Predictions about the United States are often proved to be rumors, and although people do not necessarily deliberately create rumors, the bad thing is that people who make predictions tend to believe in themselves. "

Everyone has their own views, but that doesn't mean you don't have to look at potential investment opportunities from multiple perspectives. Investing or building a stock portfolio depends on the company's past and future performance, but the experienced Graham thinks it can only be a "ballpark figure" or make it up. He also said that there should be some leeway in the analysis to ensure your own margin of safety, so that you can rest easy at night.

Principle 3: persist in seeking truth from facts

William O'Neill has repeatedly reminded us that there is no need to follow suit when investing. "people always like to refer to the opinions of others, and personal opinions are often wrong. While strong and inherent opinions affect our perception of reality, Buffett and other investment gurus have told us that intuitive judgment based on training, experience and information is the most powerful investment tool. Of course, the so-called intuition must come from a wealth of knowledge and reasonable judgment.

Principle 4: look for investment opportunities that are inconsistent with market conditions

David Ibne points out that the rush is a good sign that the market is overheated. "an industry accounts for more than 30% of the index, indicating that the industry is generally welcomed by investors, such as the technology industry and the financial industry in 1999. This also shows that it is big.

When the amount of capital enters these industries, excessive supply will inevitably lead to a decline in yields. If you are still in this industry, choose to leave. "

He prefers companies that are out of step with market conditions, with sound operations, competitive advantages and reasonable profit margins. People with opposite opinions will choose high-quality companies that no one likes, such as Kraft Foods. These companies are inconspicuous in the market, their real value is often distorted, and the price is higher or lower than the intrinsic value.

When the economy was in a quagmire, John, a maker of tractors and agricultural equipment, successfully broke all analysts' predictions with net income in 2009. Over the same period, the s & p 500 fell 0.3%, while the company's share price unexpectedly rose 5%.

Principle 5: stay away from debt

"the only way for smart investors to go bankrupt is to borrow. Buffett said, "when the market goes up, investors are exhilarated by borrowing, but when the market goes down, investors are at their wits' end." Smart investors don't support investments by borrowing. When the market is on the rise, investors will be carried away by victory and their borrowing behavior will get out of control. When everyone does that, please protect yourself carefully. "

Closely follow companies with low debt levels and abundant cash flow, and make good use of their investment funds. In addition, Buffett added, don't use your house as an investment asset and use it as a source of money to buy yachts, invest in real estate or start a company.

The real estate storm before and after 2009 has taught home buyers, lenders, brokers and the government a good lesson, which will ensure the stability of the market in the future. Buyers should honestly pay no less than 10% of the down payment, and the monthly loan should be within their affordability. When applying for a loan, the income level and situation of property buyers should be well verified. "

Principle 6: meet the volatility of the market

Most of the time, fluctuations in the stock market are just normal short-term movements. 'The volatility in the stock market has not stopped since the Graham era, 'Mr. Ibne said. "We all know that the market is cyclical and fluctuates around the real value of the enterprise. "

"I like the changes in the market. "opportunities also emerge when market movements are at odds with the reality reflected in fundamentals," Ibne said. Recall that small-cap stocks in 1999, junk bonds in 1991 and large-cap stocks and long-term bonds in 1982 all confirm this fact. "

Ibne is not the only one who holds this view. Charles Brandi also saw the opportunity presented by the 2007 Murray 2008 market crash. "We are well aware that past performance does not guarantee future performance, but at least it is enlightening. "We think that when people look back on this period, they will believe that it was the golden age of investment," Brandi said. Brandi went on to explain that after the market crisis, stock prices remain low and high-quality investment opportunities are waiting for you to discover and pick up.

Principle 7: listen to the advice of "crew"

Although value investors will actively respond to market fluctuations and do not carefully measure the best timing for investment, the various investment instruments mentioned in this book can still serve as a weather vane for everyone to invest. They will warn you when there is a storm in the sea. Overheated markets sometimes take a long time to return to normal, but this day will come sooner or later. Doesn't gravity make it easy for us to fall and difficult to rise? All investors, including those of exchange-traded funds and mutual funds, should pay close attention to the development of the market and take necessary adjustment measures accordingly.

Some things about ships also apply to the field of investment. For example, "A rising tide lifts all boats". The rising tide of the market is bound to push up stock prices, but the ebb tide of the market will also relentlessly strand ships that do not enter the safe zone in time. For example, "going up against the wind", the crew will constantly adjust the sails according to the direction of the wind, no matter what the direction of the wind, can reach the destination.

There are two wind directions to be careful: a hurricane that causes the market to be overvalued and a hurricane that drives stocks into high prices. So what we should do is to build a sturdy ship, steer it skillfully in the sea of the market, and know that when the storm comes, we will sail into a safer harbor. The real example is what Buffett did when the stock market overheated in 1969. He admitted to his clients that there were no good and cheap stocks in the market, and then he closed his company.

Principle 8: stay calm when the market is overheated

Seth Karaman argues that investors must be vigilant and guard against emergencies in advance. In short, the best investment strategy is to buy stocks rather than the stock market, investment decisions are based on the fundamentals of individual stocks, coupled with the judgment to identify the overheating of the stock market, is enough to ensure that your investment into the safe zone. The overheating of the stock market will show the following signs:

Share prices hit an all-time high

Price-to-earnings ratio soars

Very few dividends, even if they are at an all-time low, even lower than the bond market yield.

New shares issued in a pile

Margin trading has sprung up in large numbers.

The volatility of stock index increases；

In a market frenzy, investors seem to repeat their previous mistakes one after another.

"these are old lessons. "Buffett said thoughtfully," they are nothing new, and everyone knows them, but when they are happy, they forget all about them. "

Principle 9: diversify investment

If the future can be predicted, there is no need to diversify. If all assets rise and fall at the same time, diversification is also superfluous. Diversification requires us to build a broad asset base to achieve investment growth and security.

"I want to emphasize that every investor should hold a certain amount of gold. "David Ibne said again," Real estate, stocks and hard-link assets should all have a place in the portfolio. Real estate should be concentrated in global markets without bubbles, while stocks should be diversified globally. "

Principle 10: inflation will not go away

Inflation is our invisible and hidden enemy. It is it that destroys the economy, seriously hurts enterprises, and engulfs our personal wealth and happiness.

"inflation will always be with you. "in the long run, very small inflation is powerful," Buffett said. He believes that the best way to fight inflation is to maintain his profitability. "alternatively, if you choose an enterprise with low capital requirements, such as Coca-Cola Company, which holds its shares, you can share the income level of the US economy. "

Principle 11: face up to mistakes in investment

People make mistakes, and investing is no exception. Take precautions in advance, don't blame yourself after making a mistake, and move on. In a letter to shareholders in 2009, Buffett admitted that buying large amounts of ConocoPhillips shares was a major mistake. "I didn't expect energy prices to plummet in the second half of the year. "he bravely went to the front of everyone and admitted the seriousness of his mistake," the wrong timing of the purchase cost Berkshire Hathaway tens of billions of dollars. "for many years, Buffett later admitted that he had made a lot of mistakes. Sometimes he jokes that he should join AA to get out of the habit of investing in the airline industry. But his outstanding investment choices offset the impact of his mistakes, making Berkshire Hathaway a model of success.

Principle 12: enjoy the process of investment

Investment is full of fun and challenges, but also brings a pleasant feeling to investors. Why not regard investment as an adventure in this wonderful world?