Investment Rules
The essential rules every investor should follow to survive and thrive in the markets. Some are about protecting capital. Others are about protecting yourself from your own emotions.
These rules have been repeated by the greatest investors of the last century — and they are as true today as they were a hundred years ago. Read them. Follow them. Never forget them.
Risk Management
Protect Your Capital First
The first rule of investing is never lose money. The second rule is never forget the first. Without capital, you cannot invest.
Never Risk More Than You Can Afford to Lose
Position sizing is more important than entry timing. A single bad trade should never destroy your portfolio.
Diversify, But Not Too Much
Concentration builds wealth; diversification preserves it. Find the balance that lets you sleep at night.
Cut Losses Quickly
Small losses are a cost of doing business. Large losses are fatal. Never let a small loss become a big one.
Keep Cash Ready
Cash is not a drag — it is optionality. The best opportunities appear when everyone else is forced to sell — often during market crashes.
Beware of Leverage
Leverage magnifies both gains and losses. It has destroyed more fortunes than any market crash ever has.
Psychology
Control Your Emotions
Fear and greed destroy more portfolios than any market crash. Your worst enemy is yourself.
Be Patient
The market rewards patience and punishes impatience. Time in the market beats timing the market.
Accept Being Wrong
You will be wrong. Often. What matters is how much you lose when wrong, and how much you gain when right.
Ignore the Noise
News, opinions, and predictions are mostly noise. Focus on facts, not on what people say about them.
Stay Humble
The market humbles everyone eventually. The moment you think you have it figured out, you're in danger.
Beware of Confirmation Bias
We seek out information that confirms what we already believe. Challenge your own thesis first.
Don't Chase Performance
Past performance does not predict future returns. Yesterday's winners are often tomorrow's losers.
Strategy
Invest in What You Understand
Never buy something you cannot explain in one sentence. If you don't understand it, you don't own it — it owns you.
Think Long-Term
Short-term moves are noise. Long-term trends build wealth. Compounding is the most powerful force in investing.
Buy Quality, Not Hype
Great businesses at fair prices beat mediocre businesses at great prices. Quality compounds.
Do Your Own Research
Never invest based on a tip, a tweet, or a friend. If you wouldn't do the work, don't do the trade.
Let Winners Run
The biggest mistake investors make is selling winners too early and holding losers too long. Do the opposite.
Have an Exit Strategy Before You Enter
Know exactly when and why you will sell — before you buy. Emotions cloud judgment at the wrong time.
Recessions Are Buying Opportunities
The best prices appear when everyone is panicking. Buy when there's blood in the streets.
Discipline
Have a Plan
Write down your strategy before you trade. A plan you didn't write is a plan you won't follow.
Follow Your Plan
The market will test you. Discipline is doing what you said you'd do, even when you don't feel like it.
Keep a Journal
Record every trade: why you entered, why you exited, what you learned. Reviewing your mistakes is how you grow.
Learn Continuously
Markets evolve. Strategies decay. The investor who stops learning is already losing.
Never Stop Improving
The best investors are not the smartest — they are the most disciplined. Mastery is a daily practice.
Do Nothing When There's Nothing to Do
Patience is a form of action. Sometimes the best trade is no trade at all.
Never Trade with Money You Need
Money you need is money you will lose. Invest only capital you can afford to see fluctuate — or vanish.
Review, Adjust, Repeat
The market changes. Your strategy should evolve with it — but only after careful reflection, not in panic.
From Rules to History
Trading Legends
The real investors behind these rules — from Jesse Livermore to Warren Buffett, and the lessons they left behind.
Finance Movies
How these principles play out in real life — and in the films that have portrayed the rise and fall of traders and investors.
Market Crashes
The panics that tested every one of these rules — from 1637 to 2022, with causes and impact.
Market History
The deeper history behind the rules — from Tulip Mania to the dot-com crash and beyond.
— Benjamin Graham