Whether you’re an entrepreneur, a venture capitalist, a casual investor or just a shopper looking for a deal, you should know how to buy low and sell high. Buying low and selling high is not easy. It’s not easy because it requires too things humans are notoriously bad at: long term planning and emotional control. But if done over a long period of time, buying low and selling high is a surefire way to get rich.

Warren Buffett is perhaps the king of buying low and selling high. These tips are largely regurgitated from his speeches and biographies which I’ve been reading over the past two years.

Let the market serve you, not instruct you.

Everything has both a price and a value. Price is what you pay for something, value is what you get. The two rarely match. Both can fluctuate wildly depending on a lot of things. For instance, the price of gas can double or triple in a year based on events in the Middle East, but the value of a gallon of gas to you largely remains constant.

Don’t let the market ever tell you the value of something–don’t let it instruct you. Your job is to start figuring out the intrinsic value of things. Then you can take advantage when the price is far out of whack with the true value of something–you can make the market serve you.

Google’s price today is $187 Billion. But what’s its value? The average investor assumes the two are highly correlated. Assume the correlation is closer to 0. Make a guess about the true value of something. You may be way off the mark in you value estimating abilities, but honing that skill is imperative.

Be frugal.

You’ve got to be in a position to take advantage of the market, and if you spend your cash on unnecessary things, you won’t be. Buy food in bulk at Costco. Cut your cell phone bill or cancel it altogether. Trim the fat wherever you can. You’d be surprised how little you can live off of and be happy. Read P.T. Barnum’s “The Art of Moneygetting” for some good perspective on how being frugal has been a key to success for a long time.

Always be able to say “no”.

The crazy market will constantly offer you “buy high, sell low” deals. You’ve got to be able to turn these down. If you don’t have good cash flow or a cash cushion, it’s very hard. That’s why being frugal is so important.

Be Happy

If you’re happy with what you have now it’s easy to make good deals over the long run. Buying low and selling high requires long term emotional control. If you’re unhappy or stressed, it’s very hard to make clear headed decisions. Do what you have to do to get happy.

Make the Easy Deals

Out of the tens of thousands of potential deals you can make every month, which ones should you act on? The easy ones. Don’t do deals in areas that you don’t understand. Do deals where you know the area well. I wouldn’t do a deal in commodities, but I’d certainly be willing to invest in early stage tech startups.

Margin of Safety

The easy deals have a wide margin of safety. An easy deal has a lot of upside. An easy deal with a wide margin of safety has little to no downside. Say a company has assets you determine are worth $1 Million and for some reason the company is selling for $950,000. Even if the company didn’t grow, it has a good margin of safety because the price of its assets alone are worth more than the price you paid.

Read a lot

How do you find these easy deals? You’ve got to read a lot. You’ve got to keep your eyes open. Absorb and think mathematically about a lot of information you encounter in everyday life.

Buy a business

Businesses can be the ultimate thing to buy low and sell high because they have nearly unlimited upside. Real estate, gold, commodities, etc., can be good investments perhaps. But when’s the last time you heard of someone’s house going up 10,000%? Starting a business can be your best investment ever, as you are guaranteed to buy extremely low, and have the potential to sell extremely high.