10 rules for successful long-term investing

Rule 1: Ride a Winner

Avoid attachment to arbitrary rules, and consider a stock on its own merit & keep a portfolio of less but high potential stocks.

Rule 2: Sell a loser

Despite all considerations, there is no shame in recognizing mistakes and selling off poor performing stocks to avoid further loss

Rule 3: Don’t panic over short-term

It’s better to track the big-picture & have confidence in a stock’s larger story, and don’t be swayed by short-term volatility.

Rule 4: Don't overvalue a baseless Hot Tip

Regardless of the source, never accept a stock tip as valid & always do your own analysis on a company before investing

Rule 5: Make a Strategy and Stick With It

Keep the end in mind & stick with a single investing philosophy. Jumping between different approaches is risky & dangerous.

Rule 6: Don't Overemphasize the P/E Ratio

Placing too much emphasis on a single metric is ill-advised. P/E ratios are best used in combination with other analytical processes.

Rule 7: Focus on the Future & Keep Long-Term Perspective

Making informed decisions based on things that have yet to happen requires a strong focus on the long-term goal of investing.

Rule 8: Have an Open mind

Don't dismiss a stock just because it isn't famous rather an obscure small-cap today may become a huge large cap in future.

Rule 9: Tolerate the Temptation of Penny Stocks

Penny stocks are likely riskier than higher-priced stocks because they tend to be less regulated and more volatile.

Rule 10: Be concerned about taxes but don’t worry

While tax implications are important & shouldn't be ignored, they are secondary to investing and securely growing your money.


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