Rule #1 investing involves searching for great companies to invest in and that too at a price that makes them attractive. This strategy is widely employed by investors all over the world.
There are lots of investment strategies claims to aid investors in making a lot of money in a very short period of time. But out of all, rule one investing strategy has been the most popular one.
This investing strategy comes into existence through Warren Buffet who believed there are only 2 investing rules. These are :
- Rule 1 – Focus on not losing money
- Rule 2 – Never forget Rule no 1.
So, Rule 1 is more concerned about investing than speculating. Investing needs to be done with certainty. The basic idea behind this approach is about focusing on not losing money. Investors can save themselves from losing money by always being certain of their actions and then actually make an investment because wishing, guessing, hoping, waiting, praying is what most people are doing.
They invest their money then hope and wait. It is not Rule#1 trading strategy. It consists of research about finding great companies to put money in that too at an affordable and cheap price (Underperforming Shares of the Companies).
You can find these outstanding companies with the help of 4M’s mentioned below.
What are the 4M’s Of Successful Investing?
Before mastering the 4M’s of trading, you should know – 4M’s are a kind of guide for searching for good companies and to be certain whether you should invest in a company or not.
These 4M’s include :
- Management
- Meaning
- Moat
- MOS
Let’s get to know more about these in detail.
a. Management
One of the most important factors you should consider whenever making an investment is the management of the company.
Any company’s growth and wind up is totally dependent on the people who are actually running it. They need to be honest, determined, and talented.
So before making any investment into a company, you need to get familiar with the company, its management, people who run it and need to build your trust in that company towards its growth. Only then you need to invest in that firm.
b. Meaning
If you are planning to make an investment, it needs to have meaning to you. Meaning means here the ability to analyze and forecast the future of the organization.
Always invest with certainty, where you can see the benefits you will be getting in the future and makes you feel confident about your investment action. It also makes you proactively research for the company and make you aware of all of the things happening with it, which play a key factor in being a successful investor.
c. Moat
It is a situation when competitors find it difficult to come in and carve away a portion of that company’s market share.
d. MOS
MOS basically knows as Margin Of Safety. It is a measurement of how “On sale” companies stock price is up or down to the actual value of the company’s stock.
This variation between the actual price and its value is an important factor, as any company’s stock price may vary hugely without actually affecting its value.
So, here the goal, find great companies for bargaining i.e., 50% of their actual value. Just by implementing 4M’ in your investment strategy get ready to see the miracles.
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