Punch Card

I recently heard one of warren buffett's old speech somewhere some time ago. He said something about being careful when investing. Today, the market reacts to crowd mentality, its of course good for value investors. Don't get me wrong, despite the portrayal and behavior, the modus operandi is not to act in the opposite direction regardless of the endeavour. But rather, we act on our own research and findings. Just that more often than not, they seem to go in the opposite direction with the masses.

This is briefly what WB said: imagine you have a punch card, lasting ten, maybe twenty, punches. And this punch card will be with you all your life, each time you invest in something you have to punch it. We will be more careful as to how we use the punch card. We will not just buy a share because we heard someone said somethings in a party or over lunch.

If you act this way, you will know why your investments succeeds or fails and you will repeat or not repeat based on the outcome. But nonetheless, you know something.