Posts filed under “Rules”

10 Ways to Simplify Your Investing

My Sunday Washington Post Business Section column from yesterday — Keep it simple, avoid the pitfalls — described 10 ways to keep your investing simple.

Here are my 10 (plus 2 corollaries)

Simplify Your Investing
1 Go passive.
2 Diversify across asset classes.
3 Be mindful of valuation.
4 Dollar cost averaging.
5 Keep costs and expenses low.
6 Rebalance your portfolio.
7 Avoid the noise.
8 Review your portfolio regularly.
9 Steer clear of venture capital and private equity
9b Most IPOs are a sucker play.
10 Avoid new financial products at all costs.
10b Don’t buy “house product,” either.

You can see the explanation for each of these here.

 

Avoid becoming these dudes:

 

Source:
Keep it simple, avoid the pitfalls
Barry Ritholtz
Washington Post, January 25 2013
http://www.washingtonpost.com/business/keep-it-simple-avoid-the-pitfalls/2013/01/24/210063fc-65a3-11e2-9e1b-07db1d2ccd5b_story.html

Category: Apprenticed Investor, Rules

Simplifying Your Investment Strategy

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My Sunday Washington Post Business Section column is out. This morning, we look at the advantages of avoiding complexity in your investment process. The print version had the simple headline Simplifying Your Investment Strategy while the online version used the hedder Keep it simple, avoid the pitfalls.

There are know advantages to certain complex investing strategies, but these complexities become harmful disadvantages most of the times, as Humans are emotionally unable to follow them.

By creating an investment plan that is simple and easy to follow, you make it more likely that you will ultimately succeed and reach your goals. Hence, all of the familiar themes get mentioned in my focus on simplicity: ETFs, lower costs, diversification, rebalancing, dollar cost averaging, etc.

Here’s an excerpt from the column:

We must recognize our own behavioral errors. To be blunt, you are not likely to become a cognitive Zen master anytime soon. But a little enlightenment could keep you from making some common investing errors.

Knowing these limitations, we can design an investment plan to circumvent the behavioral pitfalls. And a good step is to simplify. Toward that end, keep these 10 ideas in mind when approaching your portfolio”

The 10 ideas are not groundbreaking — but they are often overlooked.

Less can be more.


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Source:
Keep it simple, avoid the pitfalls
Barry Ritholtz
Washington Post, January 25 2013  
http://www.washingtonpost.com/business/keep-it-simple-avoid-the-pitfalls/2013/01/24/210063fc-65a3-11e2-9e1b-07db1d2ccd5b_story.html

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Category: Apprenticed Investor, Index/ETFs, Investing, Rules

Reality Check: What Are You Lying to Yourself About?

  Michael: I don’t know anyone who could get through the day without two or three juicy rationalizations. They’re more important than sex. Sam: Ah, come on. Nothing’s more important than sex. Michael: Oh yeah? Ever gone a week without a rationalization? -The Big Chill     One of the things we all do as…Read More

Category: Apprenticed Investor, Psychology, Rules

Keep It Simple

Keep it simple, avoid the pitfalls Barry Ritholtz, Washington Post, January 25 2013     “A simple, albeit less than optimal, investment strategy that is easily followed trumps one that will be abandoned at the first sign of under-performance.”     That’s from Tadas Viskanta of Abnormal Returns, a “forecast free” investment blog. He was…Read More

Category: Apprenticed Investor, Investing, Rules

Keep Investing Simple

Its the start of the new year, and most of you have been thinking about some grandiose plan for self-improvement. Quit smoking, lose weight, clean out the basement, exercise, spend more time with family and friends, floss. May I suggest taking control of your portfolio as a worthwhile goal this year? I have been thinking…Read More

Category: Investing, Psychology, Rules, Trading

Ritholtz’s Dozen Rules for Investors

These were my rules I pulled together for the Washington Post: 1. Cut your losers short, and let your winners run. 2. Avoid predictions and forecasts 3. Understand crowd behavior. 4. Think like a contrarian (but don’t always act like a contrarian). 5. Asset allocation is crucial. 6. Decide if you are an active or…Read More

Category: Investing, Rules

Bunting’s Laws of Investing

Brett Arend recently informed us of the passing of Dan Bunting, a man who “successfully managed money on behalf of private individuals and institutions for nearly 40 years.” Over the years, Bunting had developed a series of rules that governed his investing strategies. Here is the short version of Bunting’s Laws: 1. Sell stocks of…Read More

Category: Investing, Rules

QOTD: Trading versus Debating

I love this comment from Dynamic Hedges: “In cable news, debate means two opposing ideologues get equal time to spout bullshit. In trading, opposing views means someone is actually going to be right and someone is actually going to be wrong. Seek out debate and use it to clarify or disprove your thesis. Find people…Read More

Category: Apprenticed Investor, Philosophy, Rules

Lessons from the 2012 election

Lessons from the 2012 election Barry Ritholtz WASHINGTON POST November 10 2012     Wisdom can be found in many places. Whenever I encounter some momentous event with winners and losers, I try to discern broader lessons to apply elsewhere. The 2012 presidential election was no different, with lessons that can be applied to investing…Read More

Category: Apprenticed Investor, Rules

Non-Political Lessons from 2012 Election

> On Wednesday, I jotted down a few takeaways from the election that were applicable to investors and people running businesses. Really, it was for any one with an interest in learning from the misstep of others. I liked the idea so much I decided to expand it for my Sunday Washington Post Business Section…Read More

Category: Apprenticed Investor, Rules