“Perhaps the single greatest error in the investment business is a failure to distinguish between the knowledge of a company’s fundamentals and the expectations implied by the market price,” writes Michael Mauboussin, managing director and head of Global Financial Strategies at Credit Suisse, in a paper published last week.

Mauboussin shares his insights and reflections on how the investing world has changed over the past 30 years, the challenges investors face, and the importance of accounting as the “language of business.” He also outlines what he views as the “Ten Attributes of Great Fundamental Investors”:

1. Be numerate. To be a successful investor, “you have to be comfortable with numbers. There are rarely complicated calculations but a feel for figures, percentages and probabilities is essential.”
2. Understand value. While many things have changed over the years, one concept that hasn’t changed is that “the present value of future free cash flow determines the value of a financial asset.”
3. Properly assess strategy. This has two parts: (1) the first is understanding how a company makes money; and (2) the second is “gaining a grasp of a company’s sustainable competitive advantage.”
4. Compare effectively. An investor must make the crucial comparison between fundamentals and expectations. “Fundamentals capture a sense of a company’s future financial performance,” while expectations “reflect the financial performance implied by the stock price.”
5. Think probabilistically. Investing is an activity where “you must constantly consider the probabilities of various outcomes.” This involves constantly striving to find where “the price for an asset misrepresents either the probabilities or the outcomes.”
6. Update your views effectively. “Most people prefer to maintain beliefs over time, even when facts reveal their beliefs to be wrong.”
7. Beware of behavioral biases. “Great investors are those who are generally less affected by cognitive bias than the general population.”
8. Know the difference between information and influence. “Investing is an inherently social exercise. As a result, prices can go from being a source of information to a source of influence.”
9. Focus on position sizing. Proper portfolio construction involves determining the best policy regarding what positions to take and the size of those positions.
10. Then read more. Mauboussin quotes Berkshire Hathaway’s Charlie Munger as saying, “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none, zero.”