Rules of Thumb and Key Phrases: Gleaning the Nuggets of Truth
by Charles Trzcinka , Stephen M. Horan and Vahan Janjigian
Editor’s note: This article was excerpted with permission of the publisher, John Wiley & Sons Inc. from “The Forbes CFA Institute Investment Course: Timeless Principles for Building Wealth.” Copyright © 2011 by Forbes, LLC. More information about the book and a multimedia supplement are available at www.cfainstitute.org/forbes.
Humorist Will Rogers was once asked for investment advice. He responded, “Buy a stock. When it goes up, sell it. If it doesn’t go up, don’t buy it.” Wall Street has many golden rules. While many of them may seem about as useful as Rogers’ advice, they all have an element of truth and carry the wisdom of years of experience.
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You will notice, however, that some of these 22 tidbits of wisdom contradict one another. Furthermore, some are more useful than others, and some are of very questionable value. Our advice: Take them all with a grain of salt.
1. Diversify, diversify, diversify
They say the three most important things to know about real estate are “location, location and location.” Well, diversification is to investing in stocks and bonds as location is to investing in real estate.
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Stephen M. Horan is the head of professional education content for CFA Institute, and the editor of Private Wealth: Wealth Management in Practice. He is also co-author of Forbes/CFA Institute Investment Course (John Wiley & Sons, 2011).
Vahan Janjigian is a chief investment officer at Greenwich Wealth Management LLC and editor of the Money Masters Stock Report. He is also author of “Even Buffett Isn’t Perfect” (Portfolio, 2009) and co-author of Forbes/CFA Institute Investment Course (John Wiley & Sons, 2011).
Discussion
Here's another one regarding being greedy and selling too late: "It's easier to live with lost opportunity than lost money".
posted 3 months ago by Greg Anthony from Mississippi
The entrepreneur and the investor are strangely aligned in one respect: i.e.,it takes guts to put one's wallet on the line.
posted 3 months ago by Buck Bowling from Oregon
Concerning number 13 "being more right than wrong": Investing is a game of hand grenades and horse shoes;close is good enough. Our stock selection hit ratio has been 55% to 57%, historically speaking, and that has been good enough to deliver more than satisfactory long -term returns.Just remember that you must periodically weed the garden and get rid of portfolio positions that no longer meet your particular investment criteria.
posted 3 months ago by John Portwood from Louisiana
Actually, Daniel Drew's quote is " Anyone who plays the stock market not as an insider, is like a man buying cows in the moonlight." Source, "If Ignorance is Bliss,Smart Quotes for Dumb times" by John Lloyd and John Mitchinson
posted 3 months ago by Ronald Zaremba from Washington
I kind of like Woody Allen:
"Rich is better than poor,... if only for financial reasons."
posted 3 months ago by Ron Frend from California
Bottom line is good high school education and (plenty of) Common Sense, I will add high intensity to learn, will beat all who claim. Good Example: George Sorrows (spelling may be wrong), self taught Billionaire giving millions for charity since decades, there are other luminaries in the USA!
posted about 1 month ago by Vaidy Bala from
