1. Avoid highly leveraged businesses. Focus on strong balance sheets.
2. Maintain a high conviction portfolio with a low amount of positions – allowing adequate time to find new investments and understand existing investments back to front.
3. Diversification for the sake of diversification does not necessarily reduce risk. A high conviction fund can carry less risk than a large portfolio of duds or similar firms.
4. Look to buy companies valued at low multiples if they are generating strong cashflows and have sound future prospects.
5. The best asset a firm has is its brand. Buy strong domestic and global brands.
6. Buy what you know. Avoid businesses that you cannot understand.
7. Be fearful about any investment being hyped in the media and market.
8. Always analyse an investment for its intrinsic future value alone.
9. Look to re-invest dividends and participate in Share Purchase Plans when a company offers discounted shares.
10. Keep low levels of cash. The best hedge against volatility is to own great businesses.
11. Avoid shorting stocks and hedging with options. As tempting as it sometimes is to bet against a company or the economy, capitalism is generally a great tool for growth.
12. Ignore the performance of the ASX200 (or other comparable benchmarks). Buy and hold great businesses.