Within the long-running debate over which is healthier progress or worth, progress investing rules have been the clear winner up to now 15 years. Nevertheless, thus far in 2025 the FTSE 100 and European shares have stolen a march on the tech heavy S&P 500. As this rotation accelerates, I’m following Warren Buffett’s rules to assist me climate heightened inventory volatility.

Momentum investing

Now we have all heard the drumbeat many instances earlier than: purchase the dip and don’t fear when shares fall, as they all the time bounce again. This easy technique has labored time and again. However what do you do when this technique stops working?

I’m positive you have got all heard the pun that its not the autumn that kills you; it’s the sudden cease on the finish. Momentum investing is a bit like this – making an attempt to keep away from hitting the bottom, as if one does it’s sport over.

Rotation is coming

I genuinely consider that momentum investing is starting to fade. The entire dominance of US shares lately is down to an infatuation with all issues AI. As with the dotcom bubble earlier than it, as we speak any inventory remotely related with AI will get slapped on it a premium valuation.

One attribute momentum traders don’t have is endurance. How lots of the personal traders who piled into Nvidia after the discharge of DeepSeek shocked the world, are regretting their hasty transfer?

If the Magnificent 7 proceed to underperform, I can see an eventual stampede for the exit.

I definitely don’t need to be round when that day comes. I’m following Warren Buffett’s timeless rules. Meaning doing basic research and contemplating myself as an element proprietor of a enterprise that I purchase shares in.

A affected person investor

The next, lesser recognized, quote by Warren Buffett’s has had a profound impact on my investing technique

“Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about.”

In different phrases, you don’t need to be proper the entire time, you simply need to be proper about your huge bets on the proper time.

One enterprise that has grown to grow to be one of many largest weighting in my Shares and Shares ISA is insurance coverage big Aviva (LSE: AV.). I’ve been slowly constructing my stake right here over the previous 5 years. This was regardless of the consensus amongst analysts on the time of my preliminary funding being that it was one to keep away from. Its share price is up 140% since then.

What gave me the boldness to initially purchase after which preserve including, as funds turned out there, was as a result of I had executed my homework. My research had uncovered long-term structural progress drivers. These included ageing demographics and a pension provision ticking time bomb. However these developments don’t play out over years however a decade plus.

Alongside the way in which surprising turns have occurred that weren’t on my radar. For instance, the acquisition of Direct Line Insurance coverage. I’m trusting the corporate has made the fitting transfer there. However I received’t promote out no matter occurs to the share price until and till my unique funding thesis essentially alters. I let my winners run.