Successful investing is rarely about finding a “magic bullet” stock or timing the market perfectly. It is about discipline, psychology, and a rigorous adherence to a set of guiding principles. Whether you are looking at blue-chip tech stocks or junior mining plays, the mechanics of wealth preservation and growth remain constant.
Here are the 10 rules to invest by.
1. Always Buy with Conviction
The market will test you. It is not a matter of if, but when. If you buy a stock based solely on a “hot tip” from a friend or a newsletter, you are borrowing someone else’s conviction. This is a fragile foundation.
Imagine you invest in a company simply because a friend recommended it. You haven’t read the balance sheet, but the story sounds good. Suddenly, the stock drops 20%. Because you don’t truly understand the business, you have no emotional anchor. Fear takes over, and you assume the market knows something you don’t, so you sell into weakness to stop the pain. Conversely, the investor who did the work knows the drop is irrational. They see a discount on a valuable asset, and while you are selling, they are buying. If you cannot explain exactly why you own an asset, do not buy it.
The Takeaway: If you cannot explain why you own an asset and believe in its long-term thesis with certainty, do not buy it. Conviction is the only thing that keeps your hands steady when the market shakes.
2. Always Do Your Own Due Diligence (DYODD)
In the information age, ignorance is a choice, but misinformation is a trap. Browsing online forums like Reddit, Twitter, or Discord does not count as research. These platforms are often echo chambers filled with confirmation bias or, worse, bad actors promoting pump-and-dump schemes.
Real due diligence is boring, difficult work. It involves reading the 10-K and 10-Q reports (annual and quarterly filings), listening to earnings calls to hear the management’s tone, and analyzing the competitive landscape. If you blindly follow the herd, you will eventually be led to the slaughter. You must verify every claim yourself.
3. Leopards Don’t Change Their Spots
In business, a track record is the single best predictor of future behavior. This applies to both the scammers and the superstars. You must ruthlessly avoid management teams associated with previous failures or “lifestyle companies”—firms where management pays themselves huge salaries while the stock bleeds out.
Success leaves clues. In specialized sectors like junior mining or biotech, success is often serial. You want to bet on the jockeys who have won the race before. Look for figures like Richard Warke, Ross Beaty, or Robert Friedland. These men have a history of building value, navigating downturns, and exiting at premiums for shareholders. Bet on people who have already proven they know how to make money for their investors, not just themselves.
4. Understand the “Margin of Safety”
There is a distinct difference between price and value. Price is what you pay; value is what you get. The gap between the two is your “Margin of Safety.”
You should never pay “fair value” for a stock if you can help it. You want to buy a dollar for 50 cents. If you calculate a company is worth $100 per share and you buy it at $95, you have almost zero room for error. If the economy turns or your math is slightly off, you lose money. However, if you buy that same stock at $60, you have a massive cushion. Even if things go wrong, your capital is likely protected.
5. Time is Your Greatest Asset
Impatience is the destroyer of wealth. Many new investors try to find “10-baggers” in a month, taking on massive risks that eventually blow up their accounts. Real wealth is built mathematically through the power of compound interest.
Consider that Warren Buffett accumulated over 99% of his wealth after his 50th birthday. This wasn’t magic; it was the result of a long timeline. Give your investment thesis time to play out. If the fundamentals haven’t changed, the price eventually will.
6. Diversification is the Only Free Lunch
No matter how much conviction you have, you can still be wrong. Black swan events happen—pandemics, fraud, and geopolitical wars can destroy even the best companies.
While it is true that concentration builds wealth (if you are an expert), diversification protects it. For the vast majority of investors, spreading capital across different sectors, asset classes, and geographies ensures that one mistake does not wipe you out. Never bet the farm on a single harvest.
7. Check Your Emotions at the Door
The stock market is essentially a mechanism for transferring wealth from the impatient to the patient. It is driven by two primary emotions: fear and greed. Fear makes you sell at the bottom, and greed makes you buy at the top due to FOMO (Fear Of Missing Out).
You must learn to act as a contrarian. When you feel euphoria because your stock is up 50% in a week, that is usually a signal to trim your position, not double down. When you feel a knot in your stomach because the market is crashing, that is usually the time to be looking for bargains. If your emotions are high, your logic is low—step away from the screen.
8. Invest in What You Understand
Peter Lynch famously said, “Never invest in any idea you can’t illustrate with a crayon.” If you cannot explain how a company makes money, who their competitors are, and what their risks are, you have no business owning it.
Stick to your “Circle of Competence.” If you are a doctor, you likely have an edge in analyzing biotech or medical devices. If you work in construction, you understand the cyclical nature of lumber and steel. Do not stray into complex derivatives or crypto-schemes just because they are trendy. Invest in what you know.
9. Have an Exit Strategy Before You Enter
Most investors obsess over when to buy, but few plan when to sell. This leads to holding losers hoping they break even, or holding winners too long until they crash back down.
Before you ever click the “Buy” button, you should write down your plan. You need a Bull Case (“I will sell if the stock hits $X”) and a Bear Case (“I will sell if the stock drops below $Z or cuts its dividend”). If you don’t have a plan, you will rely on emotion when the pressure is on.
10. Cash is a Position
You do not need to be fully invested 100% of the time. There are periods when the market is overpriced and there are simply no good deals to be found. In these moments, holding cash is a strategic position.
Cash is “dry powder.” When the market inevitably corrects and others are forced to sell to cover margin calls or liquidity needs, you will be the one with the cash to buy their assets at pennies on the dollar. The ability to sit on your hands and do nothing is a superpower.
