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The best investment one can make is in their personal development and health. The second-best investment is one with a guaranteed return, such as clearing a balance on a credit card or car loan.***
As part of the process of capital allocation, the investor needs to have done his own due diligence as well as have determined the fair value of the asset, the risks associated with it, its future growth potential, as well as what is a reasonable margin of safety before investing in the chosen asset.***
Intrinsic value is best determined by underlying business assets, liabilities, and long-term economics and not by what others are willing to pay for the asset in the short term. ***
Purchasing an asset must be done at a discount (Margin of Safety) which serves as an insurance policy in the event the estimates we have used while valuing the investment turn out to be inaccurate.***
Every financial decision should result from a rational calculation of its effect on your overall wealth.***
The stock market is inefficient in the short term; however, equity prices synchronise with the intrinsic value of the companies they represent in the long run.***
It might seem like people who gamble and people who invest are playing the same game; however, underneath the surface, gamblers are going into the fray knowing that the numbers are stacked against them, whereas good investors have the ability to reduce the odds of losing by making informed decisions, following a proven process, and most importantly, having the ability to simply walk away from the table when the game is too hard to play.
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