When we decide to invest our savings we embark on a learning journey that will take many years to complete.
First, we need Knowledge. We must get our heads around the jargon and understand how the financial market operate. Most important is that we have a Feel for the history of markets in case we learn by repeating the mistakes of those who have gone before us.
Next, we must learn how to Analyze the Economy and Financial markets. There are Cycles in economic activity that come around at varying time intervals. Unless we understand this, we are likely to find our investments badly damaged and struggle for years to recover to where we were before the last downturn.
Then, we should learn how to Analyze the Companies so that we choose good stocks to invest in when their prices are below their value. Above all, we must seek to buy stocks that afford a Margin of Safety, which will protect our portfolio if things do not go well for a while. An integral part of this is to have strong Disciplines around Risk Management through Diversification and Position Sizing.
But another important thing is our Decision-Making Skills - How we make decisions in Selecting and Managing our Holdings.
"The best investors succeed because they seem to think Counterintuitively. They make better decisions by avoiding the common Cognitive Biases, which are natural to us all, but that hold us back in our investing."