# A Decade of Investment Thought

By [decadethink.eth](https://paragraph.com/@decadethink) · 2022-10-02

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My style of investing - Healthy and steady survival, for the human and his finances.

**Everything here is simple, but nothing is easily practice.**

**_Rule number 1: Buying a stock is equal to buying a company_**

Pithy but takes at least a decade to understand. This is what investment _is_.

**_Rule number 2: Don’t lose money_**

Outrun inflation in the very long-term. If you can guarantee 8% per year, compound interest will take care of the rest.

Define _via negativa_ what shall not be done, i.e. What bankrupts you in the long run:

*   Don’t sell short (Infinite downside)
    
*   Don’t use leverage (Multiplies chances of ruin)
    
*   Don’t invest in what you don’t understand (Outside your circle of competence)
    

As probably been said many times by prominent value-investors.

**_Rule number_**\* \*\*3: \*\*\***Valuation is only a tool to roughly estimate a downside scenario**, used with a margin of safety compared to an opportunity cost return.

Forget _pricing_ a liquidity premium. How much sleep or money will you lose given _zero_ liquidity? (In my definition of investment, sleep and money isn’t too different)

**The real upside is to be made in the qualitative assessment of business, much-harder to formulaically quantify or value.**

Do not actively seek information, but think through it all and adjust for the next step.

**Things to look for in an investment are very simple, in order of importance:**

*   Right business - Cash-flow generative? Strong “moat” ? Consumer oriented?
    
*   Right people - Young? Self-driven and focused? Integrity?
    
*   Right price - Patience.
    

So, collect good business models over the years, build personal integrity and relationships, and be patient.

Lastly, steadiness may indicate cooking the books, while roughness may be resilience.

That is all. 90% of people lose money. Good luck out there. Doing is much harder than thinking, reading, or writing.

Note: Beware self-excusals of “just trying”, “just having fun” in place of investment. You will have broken all the rules at once.

Think decade long. Simple but not easy.
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*Originally published on [decadethink.eth](https://paragraph.com/@decadethink/a-decade-of-investment-thought)*