12 Core Principles
PRS Investment Research Team
1. Stress-test portfolios looking forward—rearview mirror driving is dangerous.
“If past history was all that is needed to play the game of money, the richest people would be librarians.”
2. Don’t trust forecasts—focus on solid fundamentals, technicals, and trends.
"We've long felt that the only value of stock forecasters is to make fortune tellers look good.”
“Find a trend, throw yourself in front of it.”
3. Cash is king when the trends are down.
“We keep lots of cash so that we can both withstand unprecedented losses and…quickly seize acquisition or investment opportunities”.
“Cash is a bad investment over time. But you always want to have enough so that nobody else can determine your future."
4. Don’t speculate. Take calculated risks, while protecting the downside.
"We make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises.”
5. During bear markets, tactically moving to short-term bonds reduces risk and capitalizes on potential opportunities.
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
"A pin lies in wait for every bubble.”
6. Stay sober-minded, diligent, and consistent. Don’t get enamoured by huge promises of returns.
"You're dealing with a lot of silly people in the marketplace; it's like a great big casino and everyone else is boozing. If you can stick with Pepsi, you should be O.K."
“You never know who's swimming naked until the tide goes out.”
7. LEAD—Following the crowd can be costly!
"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."
8. A Dollar Saved is a dollar earned—Value Matters
"Price is what you pay; value is what you get. Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
9. Don’t invest on margin or borrowed money.
"We never want to count on the kindness of strangers in order to meet tomorrow's obligations. When forced to choose, I will not trade even a night's sleep for the chance of extra profits."
10. Activity is a poor substitute for Productivity or Popularity.
"The stock market is a no-called-strike game. You don't have to swing at everything -- you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!'"
11. Patience IS a virtue—the purchase price is equally as important as the sell price.
"I call investing the greatest business in the world ... because you never have to swing…There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."
“If you aren't thinking about owning a stock for ten years, don't even think about owning it for ten minutes.”
“The difference between successful people and really successful people is that really successful people say no to almost everything.”
12. Intensely anticipate, analyze, and capitalize on opportunities. They will come. Be ready for them.
“You do things when the opportunities come along.” “Intensity is the price of excellence.”
*All quotes from legendary investor Warren Buffett