2025 will also see corrections. Focus on owning correct business & the 9 basic principles of investing in small-caps

Each time there is a correction, especially one that extends a couple of weeks, investors tend to get divided into two distinct sets. The first will justify buying wrong stocks by describing themselves as “long-term investors”. The rest, genuine long-term investors, will remain focused on buying the correct business. Now what is a “correct business”? Simple: One with a track record of growth; one that does not require constant doses of capital; and where income is shared with minority investors. As the curtain comes down to 2024 and the markets look forward to 2025, here’s what investors must remember. One: That corrections are part of the market. As they happened in 2024, so they will happen in 2025. Two: Given that valuations are high, selecting the right stock is key. But even more important is managing behavioral risk. And that is something investors have to work out on their own.