When you get a balloon, the latex is firm but flexible. It will expand to a point and can continue to hold air, pop, slowly deflate or be let go of before being tied up and it shoots across the room. When you grab that previously inflated balloon, it resembles more of a shrivelled, cold scrotum. Ie, it will never be the same even if it gets more air into it.

No problem, just post your bank details, passport number, driving licence number, home address, bank balance and medicare number here LOL.....my Russian mate will be in contact

Thanks @Macca571 - I borrowed heavily from others of course. None of that stuff is original. It's all been said before by somebody somewhere. For instance, the changing horses mid-race thing (lesson #3) was from Andrew (@Strawman) Page, and also the "don't get in the way of compounding" bit in #10 is from Andrew (yesterday). Lesson 4 is just a rewording of a quote from George Soros. Lesson 5 is from Geoff Wilson (of WAM Funds), something he shared with everyone at his WAM Funds Roadshows a few years back. They looked back at their success rate over a period of time and discovered they were only getting about 40% of their initial calls right, but were still outperforming their benchmark by letting their winners run and cutting their losses early.

Geoff's crew at WAM Funds also had (and still have) an additional rule, which was that they only invest in a company when they could identify a potential positive catalyst that should cause the market to positively re-rate the stock (and drive the share price up). No catalyst, no buy. Once the catalyst occurs, if no further positive catalysts have been identified, sell. A quick example would be investing in an engineering and construction (E&C) contractor like Monadelphous Group (MND) back when they were tendering for all three of the big new iron ore mines that BHP, RIO and FMG were building a couple of years ago (South Flank, Gudai-Darri [formerly known as Koodaideri] and Eliwana) and the potential positive catalyst was that MND would win one or more of the main E&C contracts for the processing plants and associated infrastructure - due to their previous positive working history with the 3 miners, particularly RIO and BHP, their industry position, reputation, capabilities, and track record. Each of those main contracts was worth hundreds of millions of dollars in revenue, so they were a big deal for whoever won them. MND were indeed awarded a number of those contracts, both large and medium-sized, along with a small handful of other contractors, and their share price did rise on the news of those contract wins. I was holding MND at the time myself, but I didn't need WAM Funds to point me in that direction. I'd been on MND longer than they had. Point being, that you can add that as a rule also if you want - the catalyst thing. Basically it means you should have a good reason why the share price of the company you are buying should increase and you can explain it to somebody if required, and you know the basic timeframe that this should occur in. These catalysts don't always play out as we expect, but the idea of trying to identify positive catalysts that may occur in the future is still a useful exercise that may improve your win rate.

Another way of framing that one is that we all sometimes believe that a company we hold (or are looking to buy) is seriously undervalued by the market, but the real question we should be asking is: What is going to make the market come around to OUR way of thinking? As John Maynard Keynes - or Gary Shilling - said many years ago: "Markets can stay irrational longer than you and I can stay solvent." So it's good to have a general idea of what is going to change the market's mind.

But yeah, those 14 lessons (or basic rules) that I listed last night are ones that have resonated with me, and are from all over the place. None of them were made up by me. They are just things that I've learned to do, or wisdom I now try to adhere to. Great if it helps people think about things a little differently.

I've just made a few edits to those 14 lessons (or my 14 rules) in this thread, to make them easier to read, and/or to understand. A little more detail, and the main lessons are now in bold type. No major changes, just a little more colour really. If you're reading this in the newsfeed on the homepage you can click here and scroll down - you'll find it.

@PortfolioPlus thats right use that cashflow statement. as an old cfo of brambles told me it is the only useful thing the accountants had created. the predecessor was useless. beware shifting cashflows between CFI and CFO to amke CFO look better, is the main dodgy caper i have coem across