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34 Investment Strategies and

Rules to Make You a Better
Investor
by KenFaulkenberry | Portfolio Management

The most important attribute of successful investors is discipline in

following a set of investment strategies and rules. In other words you
don’t have to have a high IQ, a high education, extensive experience, or
even great instinct.
You can be a successful investor by being disciplined in following a set
of investment strategies and rules that guide you through bull and bear
markets, times of greed and times of fear, and periods of high risk and
periods of great opportunity.
The following investment strategies and rules are proven ideas to make
you a better value investor and improve investment performance:
Investment Strategies and Rules
 6 1. Patience is a virtue; develop and cultivate it in your investment
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management. Patience is a biblical principle that, if applied to investing,
will greatly reduce your investment mistakes and improve your
investment returns.

2. Only invest when the odds are heavily in your favor. (Patience)
3. Invest like an owner. Owners look at things differently. Most people
care more about something they own versus something they rent. When
you buy an investment think like a long term owner, not a renter.
4. Implement risk control strategies with diversification rules and don’t
deviate from your parameters.
5. Understand the types of investment risk and try to avoid and mitigate
them as much as you possibly can.
 6 6. Concentrate on not losing money. It’s more important to not lose
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money, than make money. If you are preoccupied with making money
you are apt to make bad decisions.
7. Know what kind of investor you are and the stock investing strategies
that best fit your beliefs and personality.
8. Never invest money you might need because you will usually need it
when you have to sell your investment at a low price.
9. There is a difference between saving, investing, and gambling . Know
the difference and treat each one accordingly.
10. Don’t listen to financial prognosticators and forecasters.
Understanding probability theory means focusing on the long term.
11. Only invest in what you understand. Good research leads to good
investment decisions. If you don’t understand how and why a company
makes money, don’t make the investment.
12. Minimize asset correlations by dividing assets among different asset
categories. This is called asset allocation.
13. Never panic; but buy when others are fearful. This is when you will
get the best price. When others panic, use some of your cash reserves to
buy stocks at bargain prices.
14. Don’t time the market; you can’t pick the bottom or the top
consistently. Learn how to make investment decisions based on value.
Buy when values are good, and sell when values are high. This is
something you learn over time.
15. Buy on corrections. Even raging bull markets have corrections which
should be looked at as opportunities to buy something you wanted at a
better price.
 6 16. Sell when others are greedy. When the market is moving higher day
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after day, week after week; give them some of your stock. Your charity 
  will usually be rewarded. No one ever goes broke taking a profit.
17. Avoid over diversification. Don’t own too many small positions or so
many stocks that you become an index fund. This assures average
performance and keeps you from owning only the very best
opportunities.
18. Focus your portfolio on a few industries with strategic advantages
and/or bargain valuations. Owning every industry is over
diversification and keeps you from owning the best opportunities.
19. Focus on the medium to long term and de-emphasize the short-term.
Where will your investments be 3 – 5 years from now?
20. Expect market volatility, but avoid portfolio volatility. Be prepared
financially (cash reserves) and psychologically to buy more of the
quality stocks in your portfolio when stock prices take a hit. Be
prepared to sell your more expensive valuations when markets are
frothy.
21. When researching dividend stocks, yield should be secondary to
Dividend Coverage Ratios and Dividend Payout Ratios. These ratios
provide insight into the safety and potential growth of a company’s
dividend.
22. Look for companies with a moat. Companies with sustainable
competitive advantages can dominate their industries. They have a high
probability of surviving, and even thriving, in bad economic times.
Companies that sell necessities have an advantage.
23. The Gross Profitability Ratio is a superior quantitative metric for
finding companies with competitive advantages.
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24. Cash Flow From Operations is a critically important company metric
because it tells you how much cash a company is generating from core
business operations. Look for companies with strong predictable cash
flows.
25. Invest in companies with great management. Management controls
the cash flow, or where the company’s capital is allocated.
26. Understand Enterprise Value because it represents the total value of
a company’s equity shares. Essentially, this is what you would be paying
if you were buying the whole company. Just because you are buying a
fractional share, doesn’t mean you would treat your money differently.
27. Use Operating Earnings Yield to compare stocks. This is a
profitability and valuation ratio. This metric tells you how much
operating earnings the company is producing compared to the stock
price.
28. The Piotroski F-Score is an easily accessible metric that combines
nine tests in profitability, capital structure, and operating efficiency. It’s
an easy approach to identify companies with good fundamentals and
eliminate weak companies.

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 6 29. Compare companies you’re considering for purchase to the best
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stocks in your portfolio. If they don’t measure up; don’t buy them. If the
price is too high; wait. (Patience)
30. Only buy stocks that are priced with a Margin of Safety. Refuse to
overpay. Many times that means passing on great companies, or at least
waiting for a better value. (Patience)
31. Companies with great balance sheets have can withstand unforeseen
problems or economic downturns that can harm leveraged companies. I
have found that Net Financial Debt Ratios provide greater accuracy in
identifying attractive companies than the more popular debt ratios that
don’t account for cash balances.
32. After all these cautionary rules and strategies are taken to heart,
realize there is NEVER a perfect time to invest. Uncertainty is a part of
investing and that is why it’s important to invest with the odds in your
favor.
33. Cash is an important asset category to protect your portfolio in bear
markets, and provide capital to buy assets when they are at bargain
values.
34. Work hard and do your homework. If you need help hire wise
experts to help you.
These investment strategies and rules will make you a better value
investor. You will reduce your number of mistakes and avoid many of
the pitfalls that wreck investment portfolios. By concentrating on taking
prudent risks that favor positive returns you boost your long term
investment returns.
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Disclaimer
While Arbor Investment Planner has used reasonable efforts to
obtain information from reliable sources, we make no
representations or warranties as to the accuracy, reliability, or
completeness of third-party information presented herein. The
sole purpose of this analysis is information. Nothing presented
herein is, or is intended to constitute investment advice. Consult
your financial advisor before making investment decisions.

About Us
My name is Ken Faulkenberry, founder of the Arbor Investment Planner. My passion is to educate individual
investors and enable them to self-direct their investment portfolio. My service focuses on ideas and concepts
that improve the skills of investors to manage their own money.
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purchase of sale of any security or investment. The information contained in the Arbor Investment Planner
and AAAMP Blog is general information or for entertainment purposes and does not constitute investment
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