Editor's note: It's not easy to maintain your portfolio's success for the long term. And in today's piece, adapted from a January 2024 issue of the Stansberry Digest Masters series, our colleague Whitney Tilson explains three lessons from crucial moments in his investing career – and how implementing them can make you a better long-term investor.

For the first dozen years of running my own hedge fund, I crushed the market – nearly tripling my investors' money in a flat market...

Along the way, my assets under management grew from $1 million to $200 million. And I made a lot of money for myself.

I don't tell you this to brag. I'll be the first to admit I made several big mistakes along the way. My experience – both big successes and major mistakes – has taught me exactly what works with investing... and what doesn't.

So today, I'll share three of the simplest and most important lessons I've learned, and how you can apply them to immediately start to improve your investing results.

Lesson No. 1: Do Your Own Research

First up: Beware of speculating, avoid the hottest sectors, and think independently...

Investing and speculating are at different ends of the spectrum.

Investing involves looking for the rare "needle in the haystack" – a stock or other asset that can be purchased for far less than its intrinsic value.

Finding such investments generally requires in-depth research to understand a company and its industry... and then develop an investment thesis rooted in knowledgeable analysis.

Speculating involves none of that. You have no idea what something is really worth. Instead, you buy something hoping to get lucky by having someone even more foolish buy it from you at a higher price. This is gambling, not investing.

The first key to making big money in the markets is avoiding big losses. And the surest way to lose a lot of money quickly (and permanently) is to get sucked into the hottest sectors, which are invariably bubbles.

That's how folks who bought marijuana company Tilray Brands (TLRY) at $300 per share back in September 2018 ended up losing a fortune. Today, TLRY shares trade for less than $1.

If you're buying what everyone else is buying, what are the odds that you've found something undervalued? Just about zero.

While piling into whatever's hot can be costly, you shouldn't necessarily limit yourself only to stocks and sectors that are hated.

One of the mistakes I made early in my career was avoiding companies unless they were truly out of favor. But some insanely great companies never really fell out of favor. That's how I missed the historic gains in search-engine titan Alphabet (GOOGL), which has risen from a split-adjusted $2.51 per share in mid-2004 to around $165 today.

Investing isn't about being a momentum follower or a contrarian... It's about thinking independently. Don't worry about whether you're standing with the crowd on any stock. Do the research, come to your own conclusions, and stick to your guns.

Lesson No. 2: Don't Be Afraid to Be Greedy

Next, you've got to let your winners run...

There's an old saying on Wall Street, "Pigs get fat, hogs get slaughtered," which cautions against being greedy.

I disagree.

If you're looking in the right places for the right kinds of high-quality businesses whose stocks are attractively priced, every once in a while, you're going to invest in a stock that doesn't just double, but goes up five, 10, 50, or even 100 times.

To build a successful long-term track record, you must be greedy when opportunities like this arise! Investing in a moonshot stock only happens maybe once a decade – or even once in a lifetime. So it's critical that you make the maximum amount of money on them.

I have owned a handful of them in my nearly two-decade career, including Amazon (AMZN), Apple (AAPL), and most painfully, Netflix (NFLX).

When I bought the stock in 2012, Netflix was deeply out of favor. But I saw a business with a product that customers loved that was more than 10 times bigger than its nearest competitor and growing like a weed. Sure enough, shares soon took off. Two years later, the stock was up 600%.

All I had to do was sit back and profit from correctly identifying one of the greatest stocks of all time. Instead, I sold half of my shares once the stock doubled. Then, I sold some more shares when it doubled again. And as the stock was doubling a third time, I got out of the position completely.

I thought I was being conservative and managing my risk. But in reality, I was shooting myself in the foot. If I had simply held on to my original position in Netflix, I would've made about 10 times more. It was a costly mistake.

That's not to say you shouldn't ever sell a stock that's working for you. It's important to control position sizes to manage risk, of course. And it's even more important to be attuned to fundamental changes in the story.

Lesson No. 3: Focus on the Fundamentals of an Investment

To be successful in investing, you must also tune out the noise and focus on fundamentals...

I've made tens of millions of dollars over the years with my favorite type of investment: a good company with strong fundamentals that encounters difficulties which crush the stock. But once the company fixes its problems, the stock rallies strongly.

A classic example is fast-food chain McDonald's (MCD), which did all sorts of dumb things in the years leading up to 2003. It engaged in a price war with Burger King... built too many stores... and focused its marketing on lower-priced, lower-margin Dollar Menu items.

The stock got clobbered, falling 70% from 1999 to 2003. But the company's operating cash flows were only down 15%. That kind of discrepancy is exactly what investors like me look for.

I invested 5% of my fund in MCD shares at the end of 2002. A few months later, when the stock had fallen even further, I backed up the truck and made it a 10% position. The stock soon doubled and has been a multibagger since its bottom.

These three key lessons will help you become a much better long-term investor... Put them to work today.

Best regards,

Whitney Tilson

Editor's note: Whitney predicted the dot-com crash... and called the bottom of the COVID-19 crash to the day. Now, he's warning that something will happen on June 2 which could reshape America on a scale unseen since 1999. For folks who are prepared, it could offer the best investment opportunity of 2025, no matter where stocks go next. Click here to learn more.