| Laurel Kenner is a financial writer in New York City. Formerly head of US stock market coverage at Bloomberg News, she previously reported on police, politics and aerospace during her 17-year news career. Rules for a life-time -
Be humble . The market is always creative in finding a way to make you eat crow - raw, squawking and fully feathered. Always have enough in reserve to meet any conceivable market eventuality. -
Don't get fixed in your ways. The cycles are ever-changing. Just when you've found the perfect stream, the fish will stop biting, the weather will change, and other fisherman will appear, reducing the catch. -
Count. If a question is important, it deserves to be tested . That involves counting, and taking account of variability and uncertainty. Conventions for settling how much of a difference is enough to differentiate the result from randomness must be decided in advance. Read Stephen M. Stigler's Statistics on the Table: The History of Statistical Concepts and Methods , or anything by Francis Galton. -
Buy-and-hold works. Almost all portfolios of NYSE issues held for 10 years or more show returns of at least 8%. See Jeremy Siegel's Stocks for the Long Run or Louis Engel's How to Buy Stocks . -
Be patient. Don't throw in the towel when things look worst, or pyramid when things look best. Stocks have a substantial tendency to reverse over all periods. See what the trend followers are doing, and do the opposite . -
Follow the insiders. Corporate officers and directors make an extra 3 percentage points on their buys and an extra 3 percentage points on their sells. They must disgorge any profits they make on shares held for less than a year. If they buy their company's stock, usually it's for a good reason, unless it is to lure you in with meaningless purchases. -
Read good books. The ideas in Shakespeare, Cervantes, Twain, Rand, Galton, Darwin and Hugo were canonical when published, and will continue to be so. -
Play games . Checkers and chess are better for market wisdom than browsing through the internet, both for you and your kids . -
Be skeptical. In no field are there more cranks and charlatans than in the market. -
Pay attention to wise people. The average reader who writes to us is much smarter and better versed on his subject than we are. Knowledge changes too fast and the level of specialization is too high for any Duo to be anything but behind the form, unless they pay close attention to you. www.worldlyinvestor.com |