20 Rules for Markets and Investing

March 12, 2019 Off By Chuck

Whether working with longer-term investors or traders honing their skills, one of the most important things is to insure they have a set of rules. The good news is the rules below are appropriate regardless of your timeframe, strategy or approach. I have to give thanks to Pension Partners director of research, Charlie Bilello, for originally putting this list together. I keep it taped to my monitor as it is invaluable in helping to keep the focus. Please note they are in no specific order and level of importance will vary depending upon the individual reader/investor.

  • Ego is your biggest enemy. Humility is your best friend. (Ego is concerned with who is right while humility is concerned with what is right)
  • There is no reward without risk. You can’t have one without the other as such if it seems too good to be true, it is.
  • The longer your holding period, the higher the odds of your success
  • Every time is different. You haven’t seen this movie before. No one has.
  • Price targets are pointless. Forecasts are foolish.
  • Plans > Prophecies. Evidence > Opinions.
  • Cycles and Trends exist. That does not mean they are easy to predict or navigate but they provide an edge for those that know how to use them.
  • Focus = fastest way to build wealth (when you have it) and the fastest way to destroy it (when you don’t)
  • The only certainty is uncertainty. Expect the unexpected. Suspend the disbelief
  • Time is infinitely more valuable than money. No amount of money can buy the past.
  • Saving is more important than investing. No savings = no investing.
  • Simplicity beats complexity on average.
  • Lower fee beats higher fee on average.
  • Doing nothing (low frequency) beats doing something (high frequency) on average.
  • Don’t be afraid to say “I don’t know”. Stay within your circle of competence.
  • Volatility and sentiment are mean-reverting at extremes.
  • No one rings a bell at the top or the bottom but many ring it in hindsight.
  • The strategy you can stick with is the best strategy.
  • Diversification & asset allocation protect us from our inability to predict the future but also from not having a plan.
  • Controlling your emotions (fear and greed) is the hardest and most important thing.