What if you could only make 20 investments for the rest of your life?
No do-overs. No adding “just one more” stock because it’s popular right now. Twenty decisions. That’s it.
It sounds extreme, but that’s exactly the mental exercise Warren Buffett uses to turn good investors into great ones. He calls it the 20 Ticket Punch Card rule.
Here’s how it works: imagine you have a card with 20 slots. Every time you buy shares in a new company, one slot gets punched. When the card is full, you’re done.
If that were real, you would slow down. You would dig into the business, understand how it makes money, and decide only if it truly deserves a place. You’d stop chasing tips and focus on companies you’d be happy to hold for decades.
At The Smart Investor, we believe this mindset is a game-changer. When you invest as if you had a limited number of “punches”, you naturally:
- Choose businesses you deeply understand.
- Pay close attention to valuation, knowing overpaying can hurt long-term returns.
- Hold your winners and let compounding work in your favour.
- This approach not only improves your returns, it also gives you peace of mind. Owning businesses you understand, bought at sensible prices, means you’re less likely to panic when markets dip.
Two investors could own the same stock. One lies awake worrying about the price. The other sleeps soundly because they know the company inside-out. Which one would you rather be?
So, I’d encourage you to review your portfolio today. If you only had 20 slots, would each company still deserve its place?
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