The 12 Timeless Rules of Investing
12 Timeless Rules of Investing: Guidelines Every Investor Should Embrace, But Few Actually Do
An Investment U White Paper Report
By Dr. Steve Sjuggerud, Advisory Panelist, Investment U
In the special report below, I identify 12 classic investing rules that every investor can use throughout their lifetimes. These time-honored guidelines are proven in helping investors achieve their goals, sometimes in capitalizing on gains and sometimes in mitigating losses. Enjoy!
1. An attempt at making a quick buck often leads to losing much of that buck.
- The people who suffer the worst losses are those who overreach.
- If the investment sounds too good to be true, it is.
- The best hot tip I’ve found is “there is no such thing as a hot tip.”
2. Don’t let a small loss become large.
- Don’t keep losing money just to “prove you are right.”
- Never throw good money after bad (don’t buy more of a loser).
- When all you’re left with is hope, get out.
3. Cut your losers; let your winners ride.
- Avoid limited-upside, unlimited-downside investments.
- Don’t fall in love with your investment; it won’t fall in love with you.
4. A rising tide raises all ships, and vice versa. So assess the tide, not the ships.
- Fighting the prevailing “trend” is generally a recipe for disaster.
- Stocks will fall more than you think and rise higher than you can imagine.
- In the short run, values don’t matter.
5. When a stock hits a new high, it’s not time to sell something that is going right.
- When a stock hits a new low, it’s not time to buy something that is going wrong.
6. Buy and hold doesn’t ALWAYS work.
- If stocks don’t seem cheap, stand aside.
7. Bear markets begin in good times. Bull markets begin in bad times.
8. If you don’t understand the investment, don’t buy it.
- Don’t be wooed. Either make an effort to understand it or say “no thanks.”
- You can’t know everything, so don’t stray far from what you know.
9. Buy value, and sell hysteria.
- Paying less than the underlying asset’s value is a proven successful investing strategy.
- Buying overvalued stocks has proven to under perform the market.
- Neglected sectors often offer good values.
- The “popular” sectors are often overvalued.
10. Investing in what’s popular never ends up making you any money.
- Avoid popular stocks, fad industries and new ventures.
- Buy an investment when it has few friends.
11. When it’s time to act, don’t hesitate.
- Once you’re in, be patient and don’t be rattled by fluctuations.
- Stick with your plan… but when you make a mistake, don’t hesitate.
- Learn more from your bad moves than your good ones.
12. Expert investors care about risk; novice investors shop for returns.
- If you focus on the risks, the returns will eventually come for you.
- If you focus on the returns, the risks will eventually come for you.