- “Diversify and Pray”
If you don’t diversify, pray harder.
- “Preserve Capital”
When considering the return on your capital, be sure to consider the return OF your capital.
- “Set Goals and Objectives”
If you don’t know where you’re going, any road will take you there.
- “Avoid Analysis Paralysis”
The opportunities to invest will always exceed the supply of capital.
- “Do Not Delay”
Procrastination is in and of itself a decision to do nothing, which in turn, solves nothing.
- “Don’t Spend Money You Don’t Have”
It’s hard to hang in there with someone else’s money.
- “Ask ‘Is It A Good Investment?’ First”
Don’t let tax considerations overwhelm your better economic judgment.
- “Ask Questions”
The only dumb question is the one you don’t ask.
- “Be Patient”
Fortunes made overnight are usually lost the same way. Lasting wealth is usually accumulated slowly but surely. After common sense, patience is the next most valuable investment trait.
- “Question Authority”
An expert can be defined as one who is never in doubt, but frequently wrong. Trust your own judgment.
- “Beware of Predictions (Especially About the Future)”
Only One knows the future and He’s not telling.
- “Pay Yourself First”
At bill paying time, remember for whom you’re supposed to be working.
- “If It Ain’t Broke, Don’t Fix It”
If all is well with your portfolio, don’t meddle.
- “Take Your Lumps When Due”
Never compound an error by deferring the day of reckoning.
- “Remember, Taxes Are Fully Negotiable”
There’s nothing patriotic about paying taxes. Uncle Sam gives risk-takers tax breaks because without them, the economy would grind to a halt.
- “Avoid Hot Deals”
Everybody wants your money, so remember, the bigger the promises, the greater the risks, whether spoken or unspoken.
- “There’s No Such Thing As Unbiased Advice”
The best you can hope for is, advice that shares your same biases.
- “Don’t shoot the messenger”
An advisor is a sounding board, not a Ouija board, so bad news is inevitable.
- “Pay for What You Want”
There’s no such thing as a free lunch. As in all things, you’ve got to give to get. Reciprocity is the key to life. You may not always get what you pay for but you assuredly won’t get what you won’t pay for.
- “Be Flexible”
In an uncertain world, change is the only constant. That’s why there is an exception to every rule.
- “In the End, When It Is All Said and Done, It’s Only Paper”
The way you are remembered will be your legacy. NOT what you left behind.
Footnote: These rules are a compilation of years of witnessing the wisdom and folly of investors, clients and others. I make no claim of originality here. Credit should go to a host of sources, including: Mark Twain (11), Confucius (19), Judge Learned Hand (15), Sir John M. Templeton (1), Bert Lance (13), Byron Simkins, Henry Kissinger (quoting Lewis Carroll) (3), John Morley (18)and many others. I assure you that, if you adopt these rules as part of your investment philosophy, you will do better than if you ignore them.
John Robert Austin
Copyright 1982, 2009