If you're investing on your own, you should create a watchlist of companies to follow. The reason for this is that there are great companies out there that may not be trading at prices you find compelling. Once you have your watchlist, you can do the following:

I think Li Lu summed this up beautifully in this Q&A:

"You must understand yourself relatively well and then you can be picky in your choices. Once you understand a company, you can just sit and wait until an opportunity comes when the price gives you sufficient margin of safety. At that point, you won’t lose money even if you’re wrong. This is when you can go all-in. This is why you should focus your research on things that you can understand well and understand clearly. And since you will only be choosing a few companies, you might as well choose the very best ones. Of course, you can also choose the smallest companies or those whose price is already cheap. If you understand them well and there is sufficient margin of safety, you will not lose money. In short, you want to invest in certainty and avoid uncertainty. When price can give you certainty, then price becomes the most important consideration. When your own knowledge, ability and judgement can give you certainty – especially when you have been researching truly exceptional companies – then you don’t need to constantly change your watchlist every few years. You can just keep going and let the company's own compounding do the work for you."

I gleaned a lot of information from this short quote:

This is what he's done for decades on his way to extraordinary market gains. This is what I'm understanding more and more for myself as well. You only need to follow a few very good companies that will be around 10+ years from now. The goal is to understand the economics of a business so well you can roughly forecast its future fundamentals. Then you value it, and wait for the price to come down where you meet your rate of return. Once it reaches that price, pile money in!

He makes it sound easy, and perhaps it gets easier the more you do it. It takes a lot of work, but it's worth it if you want to succeed at investing. To summarize, you must be able to:

To read more in depth content on the topic, please check out my full (Completely free) article on Substack: