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Warren Buffett on the Lottery of Birth

One of the reasons J.D. asked me to join his merry band of GRS writers was so that I could add the occasional investing lesson to the line-up. Today, I’m going to hand that duty off very quickly to someone else, and then get to a life lesson from a great investor.

 

Today’s lesson comes from fund manager and former Motley Fool writer Whitney Tilson, whose Tilson Focus Fund (TILFX) has the best one-year return in Lipper’s multicap core category, according to Barron’s. In a recent interview on GuruFocus, Tilson said he began his investing career by reading all of Warren Buffett’s letters. If that sounds like good advice to you, every Berkshire Hathaway annual report since 1977 — which include Buffett’s letters — can be found at the Berkshire website. (If you have a yen to hear Buffett sing as well as read his words, check out his cameo in this GEICO video.)

 

The luck of the draw
But if you’d like some other kind of wisdom from Buffett, here’s a scenario that he often describes in speeches and interviews. (We’ve now moved into the “life lesson” part of this show.)

 It’s 24 hours before your birth, and a genie appears to you. He tells you that you can set the rules for the world you’re about to enter — economic, social, political — the whole enchilada. Sounds great, right? What’s the catch?

 

Before you enter the world, you will pick one ball from a barrel of 6.8 billion (the number of people on the planet). That ball will determine your gender, race, nationality, natural abilities, and health — whether you are born rich or poor, sick or able-bodied, brilliant or below average, American or Zimbabwean. (more…)

Trading Rules – For A Survival Of The Trader

1. Plan your trade. Trade under the plan.

2. Write down your results.

3. Keep positive mood irrespective of your losses.

4. Do not bring the market from work to home.

5. Constantly raise level of your purposes.

6. Buy during bad news and sell during good.

7. Do not be afraid to buy at high position and to sell at low.

8. Always have well planned time for market studying.

9. Isolate yourself from opinions of others.

10. Always be quiet, persevering and consecutive; operate rationally.

11. Never enter into the market because you are bored to be out of the market. To be out of a position is also a position.

12. It is not necessary to enter and leave from the market too frequent.

13. Traders usually study not at profits, but at losses. Study every loss for improvement of the knowledge about the market.

14. Successful trading is combined and often accompanied by negative emotions. The most important element of successful trade is you are.

15. Always discipline yourself to follow certain rules in advance.

16. Do not allow big profits to turn in big losses

17. You should have the plan, you should know the plan – and you should follow it.

18. Perceive losses with advantage.

19. Halve your profit and never risk more than 50 % of profit operating against the market.

20. A key to successful trade – self-studying.

21. There is no so much distinction between getting in the market and losing there in natural abilities, that in ability to study the errors correctly. (more…)