The first rule of investing is survival.

Compounding only works if you stay in the game long enough for it to matter. That means capital preservation is not a defensive idea. It is the foundation of every great long-term result.

Before making any investment, ask the most important question:

What if I’m wrong?

If being wrong can destroy the portfolio, the position is too large. If the outcome depends on leverage, luck, or a single binary event, the risk is probably not worth taking.

The market rewards patience, discipline, and endurance. But it is also brutally selective. A small minority of stocks create nearly all long-term wealth, while most perform no better than Treasury bills.

That is why the goal is not to own everything. The goal is to survive long enough, think clearly enough, and concentrate only when the business is truly outstanding.

Never bet the farm.

Protect the compounding engine.