Investing with Principles, Not Emotions: 5 Core Tenets of Successful Investors

🧭 What Keeps Me Grounded When Markets Go Wild

When markets surge, everyone gets excited. When markets crash, everyone panics.

There's one thing that keeps me sane in both situations.

It's principles.

Principles keep me from getting sucked into the noise. They stop me from chasing hype, from being glued to a screen watching price fluctuations. I focus on one thing: the gap between price and value. I let time do the rest.

🤯 Why Do Most People Lose Money Investing?

Let me tell you the truth. Most people lose money with stocks.

Why?

They don't have a plan: They just start without thinking
They buy the wrong companies: Swept up by hype
They buy the right companies at the wrong price: This is more common
They sell at completely the wrong time: Because of fear

I did the exact same thing for years. It felt like the market was rigged to take my money. Until I learned how to invest the right way.

🎯 What Do People Do When Prices Swing?

When prices go up and down like a yo-yo, most people react emotionally.

They buy when it's expensive: Afraid of missing out (FOMO)
They sell when it's cheap: Afraid of losing everything

That's not investing. That's panic with a brokerage account.

Principles stop that, or at least greatly reduce it.

You can't eliminate all emotion. You're human. But principles give you a framework. A logic-based approach that says:

"I know what this business is worth. There will be ups and downs in profits. But unless the long-term fundamentals change, I'm not changing."

That kind of clarity gives you power. It gives you confidence. It keeps you from blowing up your future because you got scared of a headline or two.

📋 The 5 Core Tenets of Investing

Here are the five core principles I follow. These are the foundation. This is how I filter out the noise.

1️⃣ We Are Investors, Not Speculators

Speculation is betting on short-term price movements. Investing is participating in the long-term value of a business.

Speculator: "I think it'll go up next week"
Investor: "This company will be valuable 10 years from now"

2️⃣ Every Investment Is the Present Value of All Future Cash Flows

Sounds complex, but it's simple:

Companies make money (cash flows)
The total of future cash flows is the company's value
We try to buy it for less than that value

Focus on the cash the business generates, not the stock price.

3️⃣ If We Don't Understand It, We Don't Buy It

You shouldn't invest in what you don't understand.

Do you understand the business model?
Do you know how they make money?
Do you know what their competitive advantage is?

If not, don't buy. There are thousands of companies you can invest in. Pick ones you understand.

4️⃣ In the Short Run, the Stock Market Is a Voting Machine. In the Long Run, It's a Weighing Machine

This is Benjamin Graham's famous quote.

Short term: Markets react to emotions, news, hype
Long term: Markets reflect actual value

That's why you shouldn't react to short-term fluctuations. Time reveals the truth.

5️⃣ A Great Story Can Become a Terrible Investment If You Pay the Wrong Price

This is the most important one, and the one many people disagree with.

No matter how great the company
No matter how amazing the technology
No matter how high the growth potential

If you pay too much, you can't make money.

Price matters. The gap between value and price determines your return.

💪 What Principles Give You

When you invest according to principles, you get:

Clarity: You know what you're doing and why
Confidence: Market volatility doesn't shake you
Consistency: You don't flip-flop based on emotions
Long-term wealth: Principled investors win in the end

🛡️ What Should You Do When Markets Crash?

When stocks drop 30%, 40%, 50% or more, that's not a reason to panic.

It sounds illogical, but that's the opportunity we've been waiting for.

If you've built your watchlist, if you know what you want to own, that's when you strike.

People often ask: "What if the market goes to zero?"

My answer: All the more reason to invest. If the market goes to zero, your money will be worth zero anyway. The person with the most guns and land wins.

But if you chart 150 years of stock market history, when would you have wanted to buy? When the news was most pessimistic.

📈 Dollar-Cost Averaging: The Power of Habit

"The market is so overvalued. Why should I invest?"

That's a great question. A logical question.

But as I always tell people, what we're trying to do is build a habit.

I personally think stocks are massively overvalued. Only 30% of my net worth is available to invest in stocks. The rest is in real estate, businesses, etc.

Yet I still dollar-cost average into low-cost ETFs every month. ETFs like VOO or SPY that track the S&P 500.

No matter where the market is on the price vs value graph:

Sometimes you'll buy high
Sometimes you'll buy low

But if you're consistent, you'll match the market's return.

What do most people do? They buy here and sell there. The result? Returns below the market average. Because they buy at the wrong time and sell at the wrong time.

🎓 Key Takeaways

The 5 Core Tenets of Investing

We are investors, not speculators
Every investment is the present value of future cash flows
If we don't understand it, we don't buy it
Short term: voting machine. Long term: weighing machine
A great story becomes a terrible investment at the wrong price

How to Practice

Write these principles down and keep them at your desk
Pull them out whenever markets get noisy
Dollar-cost average every month consistently
When markets crash, invest more aggressively

🔚 Final Thoughts

This playbook isn't sexy. But it works.

Hype makes the headlines, but discipline builds wealth.

Don't play the prediction game. Investing is a game of systems and principles.

Invest consistently for 30 years, ignoring predictions and filtering out hype. One day you'll look back and say:

"Wow, I crushed it."

You don't need to be a genius predicting tops and bottoms. That's impossible. That isn't what investing is about.

What you need is a system. A process. A calm, rational plan that works when everyone else is losing their minds.