Learning to focuson process and accept the periodic and inevitable bad outcomes is crucial.Great investors recognize another uncomfortable reality about probability: the frequency of correctnessdoes not really matter (batting average), what matters is how much money you make when you are rightversus how much money you lose when you are wrong... See more

8. Know the difference between information and influence.

1. Be numerate (and understand accounting).

The goals of  financial statement analysis are twofold. The first is to translate financial statements into free cash flow. The  second goal of financial statement analysis is to make a link between a company’s strategy and how  it creates value. One simple way to do this is to compare, line by line, two companies that are in the same  business.... See more

Yet investing is an inherently social exercise. As a result, prices can go from being a source of informationto a source of influence.  Great investors don’t get sucked into the vortex of influence. This requires the trait of not caring what others think of you, which is not natural for humans. Indeed, many successful investors have a skill that... See more

make a point of reading material you do not necessarily agree with. Find a thoughtful person whoholds a view different than yours, and then read his or her case carefully. This contributes to being activelyopen-minded.

3. Properly assess strategy (or how a business makes money).

Accounting is the language of business and you need to understand it to appreciate economic value and to assess competitive positioning. Investors face a slew of psychological challenges. Perhaps the most difficult is updating beliefs when new information arrives. Position sizing and portfolio construction still do not get the attention they... See more

9. Position sizing (maximizing the payoff from edge).