At the top of every investor’s list should be DYOR, short for “Do Your Own Research,” just like the scholar in the cover picture.

Many say that avoiding losing money is the number one rule in investment, a quote often attributed to the legendary Warren Buffet. However, it isn’t exactly a rule because sometimes it is unavoidable. Not losing money is like saying remember to breathe and blink.

Nobody sets out with the hope of losing their capital. While it is a great reminder that reinforces the idea of investing and not speculating, there is one rule that should be at the absolute top of the list.

One thing that is within your control is DYOR (Do Your Own Research). This should primarily be the number one rule for investors. You have to know what you’re investing in without a doubt. We will touch on due diligence, checklists, and investment thesis concepts in other posts, but for now, this is simply about trusting, but verifying what you are looking at on a day-to-day basis.

It may not safeguard your investment, and it won’t stop you from taking losses on investment ideas. To think you can avoid losses entirely is to not truly understand the entire game of investing and how much is outside of your control.

There is never an excuse to blindly trust that a particular investment is sound, solid, and will be “guaranteed” to give you a return. We need to make this simple DYOR exercise part of our selection criteria.”

Don’t borrow another investor’s conviction…DYOR

The worst crime for an investor is to borrow conviction from another investor. Simply following the investments of others, even well-known investors, blindly is not investing.

“I invested because they invested” is not an investment thesis. I’ve invested in what other reliable sources have invested in, but never blindly. I always conduct my due diligence, i.e. DYOR. Sometimes the idea is reinforced by my analysis, sometimes I disagree and move on, even if they are far greater investors than I am.

Independence of thought is important over the long term. Always run your lane, play your game, and stick to your plan.

🥴 My lack of DYOR when I started…

During my early days of investing, I had very little knowledge compared to now (although I still have much to learn). I would make investment decisions based on hearsay and rumours. If someone mentioned a mining company that was expected to increase its value tenfold, I would dive in without doing any research, simply because I believed that whatever I invested in would surely succeed.

I had a bias that losses wouldn’t happen to me, so I didn’t bother conducting my own research.

One time, I lost capital on a resources business that was being heavily promoted in an exploration group. There was a lot of hype and confidence from commentators, touting it as the next big thing.

Without much thought, I rushed in and the investment initially did well. However, instead of selling when it was doing well, I held onto it until it eventually failed. It was the old “If this thing goes to X I’m going to be worth X” mind trick.

I realised that I had not conducted my own research and had only relied on other people’s opinions and analysis, without really understanding what they meant. In addition I also didn’t even look at the financial statements.

🙅‍♂️ I didn’t do my due diligence at all. None.

After the rise and fall of the investment, I sought answers from the same group where I had discovered the idea. There were various explanations and justifications for what happened and why it collapsed.

One of the reasons mentioned was about Africa, agriculture, and food shortages, which piqued my curiosity. I thought this was a mining resources company.

I realised that I didn’t even know what I was investing in. Instead of doing my own research, I had relied entirely on the opinions of others. The company, it turned out, was actually involved in food production in a remote village in Africa, not mining.

I was investing in something based on others’ feedback while not even understanding what I was investing in. Looking back, I now realise these were just some of the mistakes I made as an eager 20-year-old “investor.”

DYOR is simply “Trust but Verify” in action.

Always verify investment opportunities, even if you’re doing it quickly. This is more than most people will do. When looking for ideas and companies to invest in, I immediately filter out anything that promises wild returns. If someone suggests something will double or triple, I ignore it.

It’s not impossible, and I’ve done it, but it’s essentially gambling. No one can predict the direction a stock will take on any given day, let alone guarantee a 100% increase.

I filter out “hope.” If someone says, “I hope this goes up,” it doesn’t sound like thorough research to me. However, if you come across a great idea that aligns with your investment philosophy and the industries you’re interested in, do some initial digging.

It doesn’t have to be in-depth at first. Add it to a watchlist, read statements, look at all the negative sentiment, and check basic financial metrics. If it still looks appealing, start the deep research process.

Initial DYOR doesn’t have to take weeks. It can be done in an hour. For me, I can often tell within an hour or two whether a business is worth investigating further. It might take weeks for a final decision and to take a position, but it’s a safeguard.

In my opinion, doing your research immediately sets you apart from the rest. Most people don’t do it at all. They rely on others’ ideas, even those from well-known websites, and put their money on the line based on that alone.

🔎 Research aids as a reflection point.

DYOR for every investment helps you to improve as it provides a point of reflection.

If you experience losses without thoroughly understanding your investment or by blindly following others, it’s easy to play the blame game. Taking a loss and then blaming the company, management, the forum you got the idea from, or the investor you followed does not help.

The responsibility for the loss is on you alone.

DYOR provides a feedback loop that can improve your overall performance. If you incur a loss (which happens to us all) and you did not do prior due diligence or research, you won’t be able to identify where you went wrong or what you missed.

When I got something wrong and made a loss without thorough research, I would tend to feel guilty and annoyed with myself. I lost money due to speculation without process or thought, and I didn’t need to be in that type of investment.

However, when I now incur a loss after deep research or if my thesis is incorrect, I’ve noticed that I’m not as disappointed, as I tried to minimise the risk. It provides a great opportunity for reflection and analysis. It also serves as a way to learn humility, acknowledging that we don’t know everything and can sometimes be wrong despite putting in the effort.

I want to improve; I want to be a better investor and so when we do our own research we take responsibility for the investment process and become stewards of our capital, not speculators.

🗝️ The Key Takeaway…

DYOR doesn’t have to be an overly complicated process. If you come across a great idea or hear about a trending theme, take a moment to investigate further. Never invest impulsively or solely based on someone else’s actions or suggestions.

This is your capital, and it’s precious. Start tightening up the process to help make better long-term investments. DYOR.