The Rules That Don’t Change—Even When the Market Does

Markets evolve. Headlines scream. Trends come and go.

But the smartest investors? They follow a playbook built on discipline, logic, and long-term thinking.

This lesson covers 10 time-tested rules that anchor your investing strategy through every boom, bust, and distraction.

Rule 1: Think for Yourself

The crowd is usually late—and often wrong. Great investors zig when others zag. That means questioning the herd, tuning out noise, and acting based on your own conviction.

Example: Buying quality stocks during the 2020 COVID crash while others panic-sold.

Rule 2: Focus on Free Cash Flow (FCF)

Formula: Operating Cash Flow − Capital Expenditures

FCF is what’s left after the bills are paid. It’s how companies fund growth, pay dividends, buy back shares, and weather downturns.

Example: Apple’s $100B+ annual FCF powers innovation and rewards shareholders.

Rule 3: Don’t Overestimate Your Abilities

Even legends like Charlie Munger admit that luck plays a role. Track your decisions in a journal to distinguish between skill and timing.

Confidence is good. Overconfidence kills.

Rule 4: Keep Your Emotions Out of It

Fear makes you sell low. Greed makes you chase highs. Both destroy returns.

• Automate your investing

• Revisit your thesis during volatility

• Ask: Has anything actually changed?

Rule 5: You Don’t Have to Swing at Every Pitch

Warren Buffett’s baseball analogy: You can wait for the fat pitch.

Ignore the noise. Be patient. Great opportunities are rare—and worth waiting for.

Rule 6: Invest in What You Know

Peter Lynch preached it, and it still holds.

Notice the brands, services, and technologies you use every day. If you understand how the business makes money, you’ve already got an edge.

Rule 7: Avoid Day Trading

Less than 10% of day traders succeed.

Apps gamify trading. Volatility gets mistaken for opportunity.

Investing is owning a piece of a real business—not chasing candles on a chart.

Rule 8: Hold for 5+ Years

Think like an entrepreneur, not a speculator.

Case Study: Holding Costco since 2010 = 800%+ return

Customer loyalty. Consistent execution. Patience rewarded.

Rule 9: Ignore Stock Tips from Non-Experts

By the time it hits Twitter, TikTok, or CNBC, it’s already priced in.

Focus on ideas, not hype. Do your own research. Develop your own edge.

Rule 10: Treat Stocks Like Business Ownership

One share makes you a part-owner. Start thinking that way.

Tesla isn’t just a ticker—it’s a clean energy company with real factories, real customers, and real innovation. That perspective helps you hold through the noise.

Why These Rules Work

• Risk Reduction: They keep you out of trouble during hype cycles

• Compound Growth: They encourage long-term behavior, not chasing fads

• Mental Clarity: They simplify analysis and decision-making

These aren’t just rules—they’re guardrails.

Tools for Staying Disciplined

• Finviz / TradingView – Use stock screeners to filter by FCF, sector, debt, and valuation metrics

• Journaling Apps – Track your decisions and emotional triggers with tools like Evernote or Notion

• Quarterly Reviews – Set time aside every 3 months to review holdings, not every 3 hours