Saturday, May 30, 2015


Courtesy :

1. Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” 

Sounds pretty simple, right? But when you’re buying or selling stocks, never losing money can seem impossible because prices fluctuate all the time. Warren, though, believes in buying the value of a company and not its stock price. He buys value at the right price, he doesn’t speculate or gamble. He makes sure that he knows a company’s value and that it will far outweigh the price that he paid for, and that is how he sticks to rule No.1.

2. “You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”

Warren is a patient man. He would never chase prices or force any investment. He waits for the right moment (dictated by either price or market condition) to pounce, and pounce he will. This requires a great deal of discipline, and that is what separates him from the majority of unsuccessful investors. Indeed, patience is a virtue.

3. “Never invest in a business you can’t understand.” 

 This Warren Buffet quote is probably an offshoot of rule No.1. He will only play a game that he is really great at to ensure that his chances of losing are slim. Understanding a business really well can help you smell trouble from miles away. Also, you can never have conviction in something you do not understand, and conviction is what enables you to pounce on a company when the time is right.

4. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” 

Warren would always put more value in a great company with great products and management than a mediocre one that can be bought on the cheap. A company’s stock price moves with the whims and emotions of traders and speculators, and is never a good indicator of value. Never mind Wall Street, focus on Main Street and look for a great company that brings great value to its customers, investors, and industry.

5. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” 

This is a great criterion in choosing a company to buy. Only buy stock in a company that will thrive, grow, and excel in the foreseeable future regardless of stock price. I only know one kind of company that fits that description, and that is the great kind.

6. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” 

Warren knows that the stock market is full of folly. He knows that emotions like hope, greed, and fear dictate stock prices rather than logic and value. When people are panicky or fearful (as in a bear market) he takes that chance to buy great companies at cheap prices. As long as he does his research and knows the real value behind a company, he doesn’t get scared of its price fluctuations.

7. “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” 

This Warren Buffet quote shows his humility and his infinite thirst for learning and improvement. He doesn’t have a huge ego; he doesn’t think of himself as superior than anybody else out there. Nor does he think that he knows everything.

8. “Our favorite holding period is forever.” 

Warren plays for keeps. He doesn’t buy a company that he wouldn’t hold or manage until a very long time. Making amazing gains, like his, takes time. Start young and go for the homeruns.

9. “Only when you combine sound intellect with emotional discipline do you get rational behavior.” 

Investors need these two ingredients to successfully parlay the investment game. The sound intellect comes from doing your homework. It is your research and analysis of a company’s business and value. Discipline on the other hand, refers to your ability to wait for the proper price to enter. You shouldn’t chase prices in bull markets and you shouldn’t get scared in bears. Practice emotional discipline and take your investing to the next level.

10. “Without passion, you don’t have energy. Without energy, you have nothing.” 

Be passionate in what you do and do what you are passionate about. Passion will make you go to the ends of the earth to see a dream fulfilled. It will be your fuel in your journey. It will make you unstoppable. It will see you through when times get tough, and it will make life so worth living.


  1. Sir ur view on aravind similar t pfrl they too have lot of good brands arrow.Lee.Tommy Hilfiger
    Very recently gap

    1. I think, not so good image of promoters limiting the gain in Arvind

  2. Dear VP,

    Regarding Pantaloon Retail, you have written that at CMP it is around 28PE. At this PE, what will the market cap of the merged entity ? Sorry, I am novice, don't know how to calculate it.


    1. Answer for this any many similar questions are available in the links attatched at the end of that posting itself.

  3. Thanks VP Sir for great lesson. Specially about passion. The most important and difficult thing is passion in life nit only in stock market.
    Thanks again to VP Sir.

  4. Dear VP Sir
    What is propsects of Adani Power due to recent demerger events? Whether to buy at current levels?



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