For this formula to work you need to focus on three key factors.
“The key organ in your body is your stomach, it's not your brain. If you can add 8+8 and get to 16, that's the only level of math that you need to know. It's always going to be scary, there's going to be always something to worry about, and you just have to forget about all of that. If you own good companies, you'll do well”.
Avoid Human Biases. Have you happened to buy a great company but put just 1% of your funds in it because you were worried about the macro outlook? Or have you sold a great business too early due to some other worries? This is because the decision-making process is not perfect and is often distorted by psychology. I try to add relevant materials to minimise these effects.
Use the best Analytical Tools — how to decide if the price is worth it?
Apply the right Investment Principles — what type of companies to look for and where?
Having spent almost two decades in financial markets, I have concluded that successful investing can be boiled down to a relatively simple formula: Find a great business and make sure you don't overpay for it.