- Our main goal should be building a stock portfolio for every market condition. Whether it is a bull market or a bear market doesn’t matter our portfolio should give returns to us.
1. Buying Stocks When They’re Cheap
- Over the past decade, the stock market has been going up day by day. The S&P 500 has reached its all-time high. Stock prices reached extremely high levels. This bull market started in 2008 & it has still going on, it is almost 15 years.
- The main problem with this kind of market is not to find stocks for low prices. Most stocks trade with double-digit multiples. As long-term value investors this is not a very healthy environment to invest.
- But by investing deeper & deeper we can still find some value stocks for very cheap prices.
- The best thing to identify those cheap undervalued stocks is to look for the buying patterns of some great investors like Mohnish Pabrai, Chuck Akre, David Einhorn, Li Lu, etc. There are some great value investors currently buying some shares massively.
2. Be Patience
- Most investors expect stock market returns within a couple of days. As all great value investors say stock market is not a place of gambling. It is a place of protecting & growing your capital over the long run.
- Investing is not a 100-meter race. It is a marathon. Investing is a lifetime game to play.
- As Charlie Munger says you make money in the stock market just by holding, waiting, not buying or selling stocks.
“The big money is not in the buying or the selling, but in the waiting.”
Charlie Munger
“In order to have a really good investment result, all you need is patience.”
John Templeton
3. Know What You Own
- You should not buy a stock unless you understand the business well. Sometimes, your friends, family members, and investment gurus tell you that this stock is the next Tesla, this stock is going to a $1 trillion market cap, and this Artificial Intelligence stock is the future. All these statements are useless.
- First, you must understand how this business operates. how do they make money? Is the management honest with shareholders? do they have little debt?
