Financial innovation can be highly dangerous, though almost no one will tell you this. New financial products are typically created for sunny days and are almost never stress-tested for stormy weather. Securitization is an area that almost perfectly fits this description; markets for securitized assets such as subprime mortgages completely collapsed in 2008 and have not fully recovered. Ironically, the government is eager to restore the securitization markets back to their pre-collapse stature.

Almost every financial blow up is because of leverage.

Value investors should completely exit a security by the time it reaches full value; owning overvalued securities is the realm of speculators.

One must understand the importance of an endless drive to get information and seek value.

Limit risk with: Deep analysis Bargain purchase Sensitivity analysis.

To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough. Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don't when they don't.

Individual and institutional investors alike frequently demonstrate an inability to make long-term investment decisions based on business fundamentals.