The Time Tested Rules of Investing
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I am reading the book, “A Fool and His Money” by John Rothchild and am finding it to provide some great insight into the word of money management and the professionals that work within the industry. One of the sections in his book describes the research he has been doing to determine what makes a successful investor and he hilariously presents the reader with the dichotomy of investment theory written throughout time:
| 1. Be patient, never panic | 2. Be nervous, keep a close watch |
| 3. Be flexible, change courses quickly | 4. Be steadfast, have faith in your ideas |
| 5. Never sell too soon | 6. It’s never too soon to sell |
| 7. Let your profits run | 8. Cut your loses, and take profits as soon as you can |
| 9. Invest for the long term, the short term is unpredictable | 10. Invest for the short term, the long term is unpredictable |
| 11. Never risk what you can’t afford to lose | 12. A big risk is the key to a big gain. Play for meaningful stakes |
| 13. Buy when the experts are optimistic | 14. Sell when the experts are optimistic |
| 15. Buy when prices are low and there’s nowhere to go but up | 16. Buy when prices are high; things will continue to go up |
| 17. Set specific investment goals | 18. Don’t limit yourself to artificial yardsticks |
| 19. Study as much as you can; the ignorant investor is a sure loser | 20. Study nothing, since a little knowledge is a dangerous thing |
| 21. If things aren’t clear, do nothing | 22. Nothing is more suicidal than a rational investment policy in an irrational world |
As one who has done a lot of reading on investing, I think Rothchild’s list pretty much sums up the differences in opinions that exist out there. The key thing I take away from this is that there is no right answer.
That being said, I believe that a consistent strategy is the most important investing concept;
but then again an inconsistent strategy may be what is important.
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4 Comments on this post
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Donna said:
I find it very difficult to just make decisions precisely because all the experts out there have so much different advice. But indecision is very costly — my failure to move money from a high cost brokerage for my IRA’s cost me when I finally did decide to sell off some underperforming stocks and buy into a stock that looks poised for the future. I knew I should have transferred those assets, I just couldn’t make up my mind about doing it. I could probably go on and on. But the advice does not seem to help. And lately, it’s like Alice in wonderland: good news is bad and bad news is good. What’s up with the market?
Donna
September 26th, 2006 at 7:15 pm
Carnival of Investing…
Welcome to this week’s edition of the Carnival of Investing. I’m sticking with my usual method of hosting a carnival — listing a summary of each piece with the author’s reason for submitting the post to the carnival (for those…
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