Risk
All investment evaluations should begin by measuring risk, especially reputational.
• Incorporate an appropriate margin of safety
• Avoid dealing with people of questionable character
• Avoid big mistakes; shun permanent capital loss
Independence
"Only in fairy tales are emperors told that they are naked." [Buffett]
• Objectivity and rationality require independence of thought
• Just because other people agree or disagree with you doesn't make you right or wrong -- the only thing that matters is the correctness of your analysis and judgement
Preparation
"The only way to win is to work, work, work, work, and hope to have a few insights."
• Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day
• More important than the will to win is the will to prepare
Intellectual humility
"If you have competence, you pretty much know its boundaries already. To ask the question [of whether you are past the boundary] is to answer it."
• Stay within a well-defined circle of competence
• Acknowledging what you don't know is the dawning of wisdom
• Above all, "Never fool yourself, and remember that you are the easiest person to fool." [Richard P. Feynman]
Patience
"There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn't awash in cash -- and I don't want to go back."
• Resist the natural human bias to act
• Never interrupt compound interest unnecessarily
• Avoid unnecessary transactional taxes and frictional costs; never take action for its own sake
• Enjoy the process along with the proceeds, because the process is where you live
Decisiveness
"If you took our top fifteen decisions out, we'd have a pretty average record....You stuck to your principles and when opportunities came along, you pounced on them with vigour."
• When proper circumstances present themselves, act with decisiveness and conviction
• Opportunity meeting the prepared mind: that's the game