A Letter to Investors

The investing I believe in begins with the value of a business.

Behind every stock is a real business. How does it make money? Why do customers choose it? How long can its competitive advantages last? Can its profits turn into cash? These questions deserve more attention than short-term price movements.

I believe an investment approach that can be sustained over the long term needs to be grounded in an assessment of value. The market continually offers a price. Deciding whether that price is reasonable is the investor’s own responsibility.

Being optimistic about an industry does not mean buying any company in it. Liking a company’s products does not make its shares worth buying at every price. A good company still needs a sensible purchase price, and a sound investment judgment must stand up to the facts.

Before considering returns, put your financial life in order.

One of my basic principles is to invest with money you can afford to set aside.

This should be money left after living expenses, necessary commitments, and emergency savings have been provided for—money that can withstand fluctuations and remain invested for the long term. Funds needed for medical care, tuition, or debts coming due should not be exposed to stock-market risk.

I also do not support borrowing money to invest. For most individual investors, especially those just entering the market, a stable income should be the foundation of daily life. Next month’s living expenses should not depend on whether the next trade makes money.

When you need a stock to rise to solve an immediate financial problem, it becomes much harder to assess its value calmly.

For beginners, my advice is clear: start without leverage.

Do not rush into trading double-leveraged ETFs or options. First learn to understand ordinary shares, manage position sizes, and experience market fluctuations. Then consider whether more complex instruments have any place in your investing.

The prospect of attractive returns can make people underestimate the losses they might bear. Leverage magnifies more than the numbers in an account. It also amplifies greed, fear, and the urge to win back losses quickly.

There is no need to pursue the fastest possible returns from the outset. Being able to stay in the market, keep learning, and retain the ability to make considered decisions matters more than one spectacular gain.

Every purchase should have a reason you can explain for yourself.

Before placing a trade, I hope investors can answer at least a few questions:

• How does this company create value, and why am I willing to buy it at this price?
• What needs to happen in the future to support my investment thesis?
• What changes in the facts would make me acknowledge that my original reasoning no longer holds?
• How much loss can I tolerate on this investment, and under what circumstances would I reduce or exit the position?
• If the price rises, at what valuation would the expected return cease to be attractive?

These questions do not require us to predict the future accurately. They help us understand how to respond when the future unfolds differently.

Other people’s research can offer leads, and their views can stimulate thought. But the final decision must rest on your own understanding. If the reason for buying comes down to “someone recommended it” or “it keeps going up,” I do not think you are ready to make that investment.

Independent thinking includes resisting the urge to trade constantly.

Investing takes financial knowledge, but also experience, patience, and the ability to evaluate information. When faced with market news or advice, learn to ask: What is the evidence? Is the source reliable? Has the person also explained where the argument could be wrong?

Do not mistake confidence for factual accuracy. And do not let an exciting story replace basic verification. There is no free money; promises of easy profits deserve particular scrutiny.

I do not equate frequent trading with diligence. If every rise makes you want to chase the price, and every fall makes you rush to sell, emotion can take over. Repeated buying and selling without research behind it only makes the original plan less clear.

Sometimes, choosing to wait after careful research is a complete investment decision in itself.

Long-term ownership depends on value that remains worth waiting for.

I prefer to research high-quality businesses with understandable operations, sound finances, and durable competitive advantages—particularly industry leaders whose strengths can endure.

But “blue chip” and “market leader” are no substitutes for research, and a familiar name does not prove that a valuation is reasonable. I keep my distance from stocks whose prices lack support from the underlying business, are driven mainly by fashionable themes, and have moved far beyond business value.

Long-term investing still requires ongoing reassessment. If a company’s competitive position weakens, its financial quality deteriorates, or the facts overturn the original thesis, the investment needs to be reviewed. Holding something for a long time does not automatically make it a sound investment.

Investing often tests human nature: whether we can remain restrained amid excitement, continue analysing during difficult periods, and honestly acknowledge mistakes. Respecting the market means accepting that we can be wrong and leaving room for that possibility.