What Investment Principles Are Crucial to Follow?

What Investment Principles Are Crucial to Follow?

In the ever-evolving landscape of investment, we've gathered timeless wisdom from seasoned professionals including Founders and Portfolio Managers. From focusing on long-term value to the importance of conducting independent research, explore the four enduring investment principles that have guided their careers.

• Focus on Long-Term Value
• Invest in What You Know
• Diversify Across Asset Classes
• Conduct Independent Research

Focus on Long-Term Value

An investment principle I've stuck with throughout my career is focusing on the long-term value rather than chasing quick wins. I've always believed that the best returns come from investing in quality—whether that's in products, people, or processes. It's not the most glamorous approach, but it has consistently served me well, especially in situations where patience and commitment paid off.

A specific example of this was when I launched Festoon House. Rather than opting for cheaper, lower-quality lighting products just to move inventory quickly, I made a conscious decision to prioritize durable, high-quality lighting that would stand the test of time. It was a tougher sell initially, and there were definitely moments where it felt tempting to introduce a cheaper range to boost early sales. But I knew that sacrificing quality for short-term gain would hurt the brand's reputation down the road.

Invest in What You Know

One investment principle I have always held onto is to invest in what you understand. This has guided me through every major decision, whether it was launching a telecommunications company or investing in international markets.

A specific example is when I was expanding my business into the UAE. I had a strong understanding of telecommunications from my previous experience, but I took time to study the market conditions, regulations, and cultural dynamics before making any moves. By sticking to what I knew and learning the local landscape, I avoided costly mistakes and set the foundation for a successful venture that thrived in a new region. It is proof that deep knowledge of your investment plays a critical role in long-term success.

Diversify Across Asset Classes

One investment principle I've consistently adhered to throughout my career is the importance of diversification. This principle has served me well in various situations, especially during economic downturns when certain sectors face volatility while others thrive. For instance, during the recent market fluctuations caused by global events, I had diversified my portfolio across different asset classes such as stocks, bonds, real estate, and even alternative investments like peer-to-peer lending platforms.

By spreading my investments across various sectors rather than concentrating them in one area, I was able to mitigate risks effectively while still capitalizing on opportunities presented by resilient markets. This approach not only provided stability during uncertain times but also allowed me to take calculated risks in emerging sectors without jeopardizing my overall financial health.

Conduct Independent Research

Ignore the outside noise and do your own due diligence. An investment strategy needs to be emotionless, methodical, and research-oriented. Focus on a company's announcements, quarterly earnings, and annual reports, and ignore distracting talk, media opinions, and irrational hype.

I adhere to this investing principle, and it allows me to buy when the VIX is high and sell when optimism is running rampant; it kept me from buying Bitcoin and over-allocating to mega-tech stocks, and allows me to sleep at night because I have confidence in my decision-making process.