Precious investing lessons from the legendary investor Sir John Templeton's 16 Rules for Investing Success
1. Invest for maximum total real return
2. Invest — Don’t trade or speculate
3. Remain flexible and open minded about types of investment
4. Buy Low
5. When buying stocks, search for bargains among quality stocks.
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don’t Panic
11. Learn from your mistakes
12. Begin with a Prayer
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn’t even understand all the questions
15. There’s no free lunch
16. Do not be fearful or negative too often
Sir Templeton gives an explanation for each
1. Invest for maximum total real return
This means the return on invested dollars after taxes and after inflation. This is the only rational objective for most long-term investors. Any investment strategy that fails to recognize the insidious effect of taxes and inflation fails to recognize the true nature of the investment environment and thus is severely handicapped. It is vital that you protect purchasing power. One of the biggest mistakes people make is putting too much money into fixed-income securities. Today’s dollar buys only what 35 cents bought in the mid 1970s, what 21 cents bought in 1960, and what 15 cents bought after World War II. U.S. consumer prices have risen every one of the last 38 years. If inflation averages 4%, it will reduce the buying power of a $100,000 portfolio to $68,000 in just 10 years. In other words, to maintain the same buying power, that portfolio would have to grow to $147,000— a 47% gain simply to remain even over a decade. And this doesn’t even count taxes
For the rest, read them at FranklinTempleton.com
My comment:
Most of John Templeton's investing tips signify as common sense and self-discipline which should be used by any "serious" investors. I say serious because some people dip their hands on the markets for other reasons than just profits, e.g. ego trip, social desirability bias and etc...
However when dealing with "quality, value, bargain, buy low" these ultimately depends on the operating environment, which in the past had been "conventional".
Today, we are in unprecedented and uncharted territory when it comes to inflationism and interventionism that has massively distorted and obscured price signals of the marketplace.
In other words, conventional rules may not apply under the current setting which means go back to rule number 3--remain flexible and open minded.
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