Home > Best assets to buy, Best assets to sell, Predictions > Eternal Rules for Investing

Eternal Rules for Investing

The Eternal Rules for Investing are as follows:

1.  Never buy something that everyone agrees is a buy.  Buy something when the market is “quiet” not frenzied.  Buy in your own time. 

2.  Buy something where you see a wave crashing in a few years.  I saw Perth property as a buy 10 years ago because commodities would (undoubtedly) spike up because of Chinese demand.  10 years ago people didn’t understand these trends and sold cheaply.  Now they are not.  See over the head of the seller.

3.  Buy something where supply is inherently limited.  Gold, land, housing, CBD properties… these cannot be made tomorrow.  Stocks, funds, ideas, paper can be.

4.  Timing is everything.  Don’t buy at the end of the Ponzi line.  Buy at the beginning (ot at the middle).  Never at the end.  The end of the Ponzi line is OBVIOUS:  “Investors” (dopes) are buying on hopes of capital gain, not steady divd yield and on PAST PERFORMANCE (the worst guide possible to future returns).

5.  If in doubt NEVER buy last year’s “Top Performer” and ALWAYS look at last year’s “Dog”.  Dogs often turn around.  Top Performers very rarely do well in the second year from a huge run-up.

6.  Get security first, then speculate.  Diversify from a “safe” base.  What’s a “safe” base?  Cash, bonds, property.  Pay off your debts first, then start to invest.  Insure yourself.  Insure everything with a reputable trusted insurer.  Never invest so you can’t sleep at night.  Never get into debt in anything you are not 100% confident about.  There is no shame in saving money in the bank.  The best return in 2008 was cash.  Cash outperformed shares last decade.  If in doubt, save in cash at a reputable bank.  Wait until you see an opportunity.  Then take it.  Investing for the sake of investing could waste your resources and the BIG opportunity will then pass you buy.  Keep your powder dry until you see THE opportunity then grab it and ride it for everything you can. 

7.  Enjoy yourself.  Have fun investing.  A lot of successful investment is luck, timing, being in the right place at the right time.  Enjoy the process along the way and you can then say “at least I enjoyed myself” no matter what happens.

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