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Financial Freedom

37 Investing Principles To Maximize Gains & Limit Losses

A good investor is a principled investor. It’s easy to get into trouble if you don’t stay disciplined. So we’ve compiled the new “investing gospel.” If you stick to these 37 investing principles, you are statistically more likely to be successful in the markets.

The National Bureau of Economic Research conducted a study of financial planning amongst Americans over 50 years old. Those who had a plan and stuck to it achieved an average net worth three times higher than those without a plan. Even those who thought about planning had double the net worth than those who never considered a plan.

Reflect on each of these investing principles carefully. There is a lot hiding behind these simple sentences. In many cases, entire books have been written on just one of the investing principles listed below. Consider if you believe each rule and why or why not. Also, honestly assess if you’ve broken any of these rules recently.

Finally, commit to making a change. Recognize when you’re about to break one of these simple investing rules and stop yourself. It could be make all the difference down the road.

The 37 Investing Principles

37. An attempt at making a quick buck usually leads to losing much of that buck.

36. Buy and hold doesn’t always

35. Never throw good money after bad investments. (Don’t buy more of a loser.)

34. Cut your losers and let your winners ride.

33. If the investment sounds too good to be true, it is.

32. Don’t fight the Fed. (Take note of interest rates.)

31. The best hot tip: there is no such thing as a hot.

30. Don’t fall in love with your stock; it won’t fall in love with you.

29. The trend is your friend until the end.

Investing Principles

28. Bear-market rallies are often violent, giving the illusion the bull is back.

27. Low-priced stocks don’t double any faster than high-priced ones.

26. When a stock hits a new high, it’s not necessarily time to sell. Something is going right.

25. It takes courage to be a pig. (Don’t settle for small profits.)

24. Not selling a stock for a gain, simply because you’re afraid of the taxes, is a bad idea.

23. Avoid limited upside, unlimited downside investments.

22. When all you’re left with is hope, get out.

21. Don’t keep losing money just to “prove you are right.” Nobody cares.

20. Have patience and stay disciplined.

19. Expert investors care about risk. Novice investors shop for returns.

Investing Principles

18. You can learn more from your bad moves than your good ones.

17. A rising tide raises all ships, and vice versa. So assess the tide, not the ships.

16. Stocks fall more than you think and rise higher than you can possibly imagine.

15. Very few people have had great success short-selling, even in bear markets.

14. Since you can’t know everything, seek out specialists who know their areas.

13. If a company’s sales are shrinking, the business isn’t growing anymore.

12. Investing in what’s popular never ends up making you any money.

11. Bear markets begin in good times. Bull markets begin in bad times.

10. Buy value stocks that are priced less than their underlying assets are worth.

9. Neglected sectors often offer good values.

Investing Principles

8. Don’t have more than 3% of your portfolio in any one position.

7. Don’t miss an opportunity because you were too concerned with having the perfect price.

6. Avoid popular stocks, fad industries and new ventures.

5. Buy shares in businesses you understand.

4. Be patient: don’t be rattled by fluctuations.

3. Mutual funds underperform the averages over the long run. Buy index funds or ETFs instead.

2. If you don’t understand the investment, don’t invest.

That’s a lot of rules…

But they are reasonably intuitive. Right? Even still, millions of investors break these investing principles every day. And once they get behind, they begin to make even worse decisions. With that in mind, here is one final investing principle:

  1. The people who suffer the worst losses are those who over-reach.

When an investment isn’t working out the way you had hoped, don’t panic and don’t over-reach. Stick to these 37 investing principles. Eventually, you’ll have a portfolio full of winners.


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