Rules of Thumb and Key Phrases: Gleaning the Nuggets of Truth
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.
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.
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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).