Louis Ehrenkrantz’ 7 Golden Rules for Investing


In nearly 40 years on Wall Street, the late
Louis Ehrenkrantz, dean of American stock pickers, was known for his ability to
predict social and political developments — and identify companies that would
benefit most from those events.

First rule: develop a large appetite for
reading; it will hone your instincts for finding successful companies.

: don’t overdiversify; ten stocks, in at least three sectors, are
enough for the average investor.

Third rule: stick with your winners and sell
your losers; do not automatically sell when a stock hits a target price, but
continue to hold it as long as it performs well and has good prospects for the

Fourth rule: look for top-quality, out-of-favor companies; look for
companies that produce an array of high-quality products and/or services.

: don’t worry about earnings if a company makes a popular product; strong
earnings growth will follow.

Sixth rule: don’t tinker with your portfolio; check
your portfolio’s performance only once or twice a year.

Seventh rule: don’t be
afraid to hold cash; it’s okay to be prepared to purchase stocks with
beaten-down prices after a correction.

The great Ehrenkrantz’s rules were
published in a recent Bottom Line.


UPDATE: August 16, 2005 7:01pm

A reader informs me that Mr. Ehrenkrantz passed away 6 years ago in 1999, and is no longer affiliated with the firm that still bears his name . .  .

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