Many people treat investing as a prediction contest: guess policy, guess sentiment, guess tomorrow. But Duan Yongping and Buffett repeat a simpler path: do the right things as well as you can, and keep losses manageable when you are wrong.

This checklist turns “stop predicting” into actions you can actually do, and keeps your energy focused on what you control.

1) Build a circle of competence you can explain

Only invest in businesses you can describe clearly

Before buying, explain the business in one sentence (if you cannot, pass for now):

  • How does the company make money?
  • Why do customers choose it over competitors?
  • Will profits change over the next five years (business model, regulation, tech disruption, channels)?

You do not need to understand every industry. You only need to truly understand a few.

Avoid cross-border trend chasing

Do not buy things you do not understand just because “everyone is making money.” Crypto, exotic derivatives, and complex structured products are common traps. Returns outside your understanding are not repeatable, but the risks are real.

2) Hold a margin of safety: buy cheap enough

Compare price to intrinsic value

Do a simple valuation (not perfect, just reasonable). Discount future cash flow and estimate a rough intrinsic value range. Buy only when the price is clearly below value (for example, 70% or less) to build room for error.

Controllable actions (more important than picking a magical model):

  • Write down your key assumptions (growth, margins, capex, competition).
  • Write down what would prove you wrong (triggers for review, trimming, or exit).

Avoid “hot and overpriced”

When the market chases a story and valuation is far beyond common sense (very high PE, hype without earnings), do not chase. Value investing does not reject growth, but it rejects paying any price for growth.

3) Position sizing and cash: buy with stability

Do not bet everything on one name

Even if you feel confident, you may be wrong. Set rules that match your risk tolerance so one mistake is not fatal:

  • Set a limit for any single position to avoid concentration risk.
  • Diversify within your circle of competence so risk is not tied to one lane.

Always keep dry powder

Hold a reasonable allocation in cash or cash-equivalents (money funds, short-duration bonds) so you have choices in two situations:

  • When markets drop and great companies go on sale: you can buy.
  • When panic hits: you can avoid forced selling at the bottom.

4) Train the long-term mindset

Ignore short-term noise, watch fundamentals

Buying a stock is owning part of a business. As long as the moat does not erode, earnings quality does not deteriorate, and management does not break trust, short-term price swings do not require action.

A simple rhythm:

  • Do not stare at daily or weekly charts.
  • Revisit fundamentals and valuation on a quarterly or annual basis.

Define sell rules, not “sell timing”

Write your sell rules so you avoid emotional decisions:

  1. Intrinsic value drops: moat erodes, business model worsens, or management loses credibility.
  2. A better opportunity appears: same quality, higher expected return.
  3. Price far exceeds value: when price is well above your intrinsic value range, follow your pre-defined rule.

5) Turn the checklist into a daily process

Keep a short, reusable record for every trade (one page max):

  • Why I bought: what is the business and its moat?
  • How I valued it: key assumptions.
  • How I plan to buy: number of tranches and triggers.
  • How I plan to sell: the three sell rules and their signals.

When you consistently do this — lose little when wrong, and win big when right — investing depends on rules and discipline, not luck.

Disclaimer: This is for personal learning only and is not investment advice. Investing involves risks.