Investing Guide · Chapter 13
Unlocking Financial Success: Mastering the Rule #1 Investment Strategy
Synthesize all lessons into an actionable investment framework.
Warren Buffett's core principles: Rule #1 is 'Don't lose money.' Rule #2 is 'Don't forget Rule #1.' This philosophy underpins the entire investment approach.
Four Essential Steps
- Find a Wonderful Business: Identify companies with durable competitive advantages
- Know Its Value: Calculate intrinsic value through fundamental analysis
- Buy It at a Discount: Ensure margin of safety by purchasing below fair value
- Repeat Until Wealthy: Apply these principles consistently over time
The 4 Ms Framework
Meaning (industry understanding), Moat (competitive advantage), Management (quality leadership), and Margin of Safety (downside protection) form the complete evaluation framework.
Putting It All Together
Focus on the Big Five Numbers, evaluate CEO orientation toward shareholder value, calculate Sticker Price, and use the Rule #1 Toolbox to make informed investment decisions.
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