Posts filed under “Rules”

10 Lessons from 1987 Market Crash

Nice set of rules from Wallace Witkowski of MarketWatch:

10 lessons from the market crash of 1987

1. Stay objective when others get emotional
2. Be like Buffett: Buy on the fear, sell on the greed
3. Make a crash shopping list
4. What goes up fast comes down faster
5. There’s no such thing as ‘it can’t happen’
6. Tune out the daily noise
7. Don’t bail
8. Don’t use the calendar to rebalance your portfolio
9. Bet with your head, not over it
10. Investors face greater risk now

 

 

Source:
10 lessons from the market crash of 1987
Wallace Witkowski
MarketWatch, Oct. 19, 2012  
http://www.marketwatch.com/story/10-lessons-from-the-1987-stock-market-crash-2012-10-19

Category: Investing, Psychology, Rules

(Not so) Golden Rules About Investing (& Not Investing)

After last week’s Rules frenzy, Cassandra Does Tokyo sent this in. Enjoy: ~~~ Trolling the blogosphere, it seems to be the season for sharing one’s so-called Golden Rules of Investing. So here goes…   Cassandra’s 25-3/4 (or so) Tungsten-Filled Golden Rules #25-3/4. Do as I do – not as I say – but do it…Read More

Category: Humor, Rules

WaPo: Ritholtz’s Rules of Investing

> My Sunday Washington Post Business Section column is out. This morning, we look at Ritholtz’s rules of investing. The dead tree edition has the headline Think like a contrarian: Ritholtz’s rules of investing. We have 6 rules today, and 6 more rules next week: 1 Cut your losers short and let your winners run…Read More

Category: Apprenticed Investor, Investing, Rules

Sir John Templeton 16 Rules For Investment Success

Interesting set of rules from legendary investor John Templeton:

1. Invest for maximum total real return
2. Invest — Don’t trade or speculate
3. Remain flexible and open minded about types of investment
4. Buy Low
5. When buying stocks, search for bargains among quality stocks.
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don’t Panic
11. Learn from your mistakes
12. Begin with a Prayer
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn’t even understand all the questions
15. There’s no free lunch
16. Do not be fearful or negative too often

 

Complete explanation after the jump

 

 

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Category: Investing, Rules

Investing & Trading Rules, Aphorisms & Books (Fall 2012)

Back in 2011, I pulled together a full run of Trading Rules & Aphorisms.

It turned out to be a worthwhile exercise, and so I began updating this semi annually. This is a list of my favorite traders, analysts, economists and investors views’ on what to do — and what not to do — when it comes to markets.

This is the latest updated version of my:

Trading & Investing Rules, Aphorisms & Books

Livermores Seven Trading Lessons

Bob Farrell’s 10 Rules for Investing

James Montier’s Seven Immutable Laws of Investing

Richard Rhodes’ 12 Trading Rules

John Murphy’s Ten Laws of Technical Trading

Six Rules of Michael Steinhardt

• David Merkel: The Eight Rules of My Investing

Art Huprich’s Market Truisms and Axioms

DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING

Lessons from Merrill Lynch

Louis Ehrenkrantz’ 7 Golden Rules for Investing

Rosie’s Rules to Remember

In Defense of the “Old Always” (Montier)

Lessons Learned from 37 Years of Futures Trading

Richard Russell’s The Power of Compounding

The golden rules of investing (India)

25 Common Sense Money Tips

 

If you have any suggestions for any good lists of rules I may have missed, please link to them in comments. If they are worthy, they will get added tot he list.

After this run, I plan on updating this list 2x per year . . .

 

My own trading rules and favorite Trading Books are after the jump

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Category: Investing, Rules, Trading

10 Rules for Dealing with the Sharks on Wall Street

10 inviolable rules for dealing with the sharks on Wall Street Barry Ritholtz August 31, 2012     Back in 2001, a very curious deal was struck between the government of Greece and Goldman Sachs. It was an exotic dollar/yen swap for euros. What possessed Greece to do such an unusual — and expensive —…Read More

Category: Apprenticed Investor, Rules

Checklist of Errors

David E. Hultstrom of Financial Architects submitted this list in response to our Checklist of Errors, and its a good one. You can grab a PDF of this here. Enjoy . . . ~~~ I am a long-time reader and thought I could contribute usefully to your checklist, but I don’t want to post –…Read More

Category: Investing, Rules

Words of Wisdom by the late Barton Biggs

I only recall meeting Barton Biggs once (via a Green room somewhere), but his legend preceded him. This list of quotes (Thanks J!) should give you a solid basis as to his thought process and investment philosophy: * “Good information, thoughtful analysis, quick but not impulsive reactions, and knowledge of the historic interaction between companies,…Read More

Category: Apprenticed Investor, Investing, Psychology, Rules

4 Real-World Investing Rules

When investing in the real world, textbooks and theory aren’t much help. So says Michael Comeau, in Four Real-World Investing Rules That Should Be Taught in Schools. His short list of  rules are: 1. What You Know, Everyone Else Probably Knows, Too. 2. Timing Is Everything. 3. You May Be Suffering From Confirmation Bias. 4….Read More

Category: Investing, Rules

Top 10 Investor Errors: Passive vs Active Management

This is post number five in our series, bringing us exactly halfway through our ongoing look at the most common investor errors.

This morning, we are going to briefly look at what may very well be the most common mistake investors make: Being active investors.

Passive vs Active Management

Active fund management – the attempt by an investor or manager to try to outperform their benchmarks through superior stock picking and/or market timing – is exceedingly difficult. It has been shown (repeatedly) that every year, 80% of active managers under-perform their benchmarks.

Those are not particularly attractive odds.

Worse, most active managers typically run higher-fee funds. (all that activity costs money!). That combination — High Fees + Under-performance — are not the ingredients of a winning long-term strategy. This is why for the vast majority of investors, passive index investing is a superior approach.

Why? You:

-Remove the emotional component
-Take advantage of (instead of working against) mean reversion
-Garner the lowest possible fees
-Eliminate all of the friction caused by overtrading
-Keep capital gains taxes as low as possible
-Get good results over the entire long cycle
-Avoids typical cognitive errors
-Stop chasing hot managers and funds

 

Consider if your portfolio won’t be better served replacing some or all of your active fund managers with passive indices.

 

 

Previously:
Top 10 Investor Errors
1. Excess Fees
2. Reaching for Yield
3. You Are Your Own Worst Enemy
4. Asset Allocation vs Stock Picking

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Category: Apprenticed Investor, Investing, Rules