Adam Khoo’s 16 Golden Investment RulesState Street SPDR S&P 500 ETFBATS:SPYfinvestnomicsFOCUS ON QUALITY. THINK LONG TERM. INVEST WITH DISCIPLINE. 1. The Stock Market Always Goes Up in the Long Run. This long-term trend is driven by inflation, earnings growth and index re-balancing. 2. In the Short Term, nobody can predict where the market will go. When we can make profitable guesses based on the existing price trend, markets can be completely irrational in the short-term. Be prepared for all eventualities. 3. Never act on the predictions and opinions of economists or market analysts. Never make decisions based on predicting where the market is going in the short term. 4. Over the last 100 years, there have been 50 Corrections of More than 10%. These 10% corrections that occur once every 2 years, are good buying opportunities. 5. Over the last 100 years, there have been 20 declines of more than 20%. These bear markets (averaging -30% decline) that happen once every 5 years, are your golden buying opportunities. 6. Only invest in stocks of great companies with wide economic moats, consistent growth in sales, strong cash flow, high return of capital, strong growth catalysts and strong balance sheets. 7. Only invest in stocks of businesses you truly understand. Invest in businesses whose products and services you use yourself. Avoid stocks that are outside your circle of competence. 8. Avoid investing in mediocre or low quality stocks no matter how cheap they appear. Cheap crap is still crap. 9. A great business may be a lousy investment if you overpay above its intrinsic value. A great business is only an excellent investment when you buy it below its intrinsic value. 10. Never give in to the Fear of Missing Out (FOMO) and buy hyped-up stocks that are overvalued or technically overextended. 11. Only invest with money you don’t need to use for at least 3-5 years. An investment needs time to generate rewards after its 3rd to 5th year. 12. Buy shares of great companies consistently, whenever they are undervalued and whenever they are at technical support levels. Always buy into a full position over 3-4 tranches. 13. We can never buy at the absolute bottom. As long as we get a price that is fundamentally undervalued and technically supported, it is one of the many buying opportunities. 14. Always maintain a portfolio of at least 10 to 30 high quality companies with fairly equal allocation to each stock. Speculative growth companies should have half a unit allocation. 15. Maintain a diversification over Growth, Defensive, Dividend & Speculative Growth Stocks. 16. Sell a stock the moment it fails to be a great business (economic moat deteriorates). Sell a stock if you can deploy the proceeds into an even better investment (stronger moat, better value & higher growth). Source: Adam Khoo / Piranha Profits