Investment lessons for young and old
Through the “noise” of the year-end soothsaying contests, Ramond James‘s Chief Investment Strategist Jeffrey Saut reminds us of some simple investment lessons. He specifically refers to those published by Arthur Ziekel in The Financial Analysts Journal in 1995. Ziekel at the time was head of Merrill Lynch Asset Management and penned the lessons as a letter to his daughter, as reported below.
“Personal portfolio management is not a competitive sport. It is, instead, an important individualized effort to achieve some predetermined financial goal balancing one’s risk-tolerance level with the desire to enhance capital wealth. Good investment management practices are complex and time consuming, requiring discipline, patience, and consistency of application. Too many investors fail to follow some simple, time-tested tenets that improve the odds of achieving success and, at the same time, reduce the anxiety naturally associated with an uncertain undertaking. I hope the following advice will help:
A fool and his money are soon parted.
There is no free lunch.
Better to be safe than sorry. Never up, never in. Most investors underestimate the stress of a high-risk portfolio on the way down.
Don’t put all your eggs in one basket.
Remember, leverage works both ways. More money has been lost searching for yield than at the point of a gun.
Spend interest, never principal.
You cannot eat relative performance.
Don’t be afraid to take a loss.
Watch out for fads.
Take the long view.
Remember the value of common sense.
This is all you really need to know … Love Dad”
Source: Jeffrey Saut, Ramond James, December 27, 2010.
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