Posts filed under “Rules”
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
10 lessons from the market crash of 1987
MarketWatch, Oct. 19, 2012
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
> 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
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
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
• In Defense of the “Old Always” (Montier)
• The golden rules of investing (India)
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
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
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
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
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
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.
-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.