“Being so skeptical about the usefulness of advice, I have been reluctant to lay down any ‘rules’ or guidelines on how to invest or speculate wisely. Still, there are a number of things I have learned from my own experience which might be worth listing for those who are able to muster the necessary self-discipline:

 

1. Don’t speculate unless you can make it a full-time job.

2. Beware of barbers, beauticians, waiters — of anyone — bringing gifts of “inside” information or “tips.”

3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.

4. Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.

5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.

6. Don’t buy too many different securities. Better have only a few investments which can be watched.

7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.

8. Study your tax position to know when you can sell to greatest advantage.

9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.

10. Don’t try to be a jack of all investments. Stick to the field you know best.

Category: Investing, Rules

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8 Responses to “Bernard Baruch: 10 Rules of Investing”

  1. pravda52 says:

    BR I hope you can comment on Mark Cubans rule that a buying a share of stock with no dividend is the same as buying a Mickey Mantle baseball card just a bet. Buying a stock with a dividend is an investment. Given that historically 60% of all stock returns come from dividends
    My rule is do not get involved with crooked people. Given that 10% of all American companies profits go to insiders and dividends are low if exist at all Therefore I buy European ADRs where insider salaries are more modest and dividends are great. I perceive less corruption in Europe than here. Enjoy your blog hope see fit to comment

  2. boveri says:

    These guidelines from Baruch are a hundred years old and as relevant and good advice as ever.

  3. Casual_Observer says:

    If you follow 6, do not fail to follow 3 and 7. Personal experience talking here. If you can’t follow 3, then it’s index fund investing for you.

  4. arthurcutten says:

    You left out one…

    ““Gold has worked down from Alexander’s time… When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.”

    • I am not going to edit Bernard Baruch’s rules — If I did that it would make me a fool . . .

    • Liquidity Trader says:

      Barry is being polite — I would say you are just another goldbug who has no comprehension of what investing actually is or who Bernanrd Baruch was . . .

      • flakester says:

        Probably not, given the large out performance of early entry gold bugs/investors.

        You likely didn’t buy & win.

  5. A very good set of guidelines to abide by when investing. If only the masses followed (or even were aware of) this advice.

    I do wonder one thing though – if you are following the 9 other rules, how important do you really feel rule 9 is? It seems to me that if you’re doing it right, keeping back some of your capital may be a slightly strange strategy.