RightSide Commentary -Education

BEST TRADING AND INVESTMENT PRINCIPLES FROM  INVESTMENT AND TRADING GURUS

Click Rightside Live to listen to the archived podcast on investment and trading advice from investment gurus.

11/9/2007 3:51:58 PM
Rightside LIVE (48 min.)
Rightside LIVE The RightSide Advisor Staff lists the best advice and principles from investment and trading gurus. 

The investment/trading advice and principles below are gleaned from investment books and financial and investment press.

From Money Masters by John Train

Have a discipline - Pick several styles and know them well. Know when it the discipline is working and when it is not working. If it is not working sit the market out. Any successful approach is bound to fail at some point.

Know what you’re doing very well

Flexibility

Be realistic

Be patient

From Market Wizards, Jack D. Schwager

Look for hysteria and go against it.

Never put more than 5% into a trading idea

Understand risk management

Under trade

Don’t personalize the market

Be willing to make and accept mistakes

Don’t risk significant amounts of money in front of key reports

If you don’t place a trade you can’t win, if you loose everything you can’t trade.

All great trades are seekers of truth

Have conviction but have flexibility to know when your wrong and exit the position

Make sure odds are in your favor

Act independently

Don’t trade if you have other stresses in your life.

From Soros on Soros

There is no shame in making a mistake, only in failing to correct it.

From Classics An Investors Anthology

It is impossible to produce superior performance unless you do something from the majority.

The time of maximum pessimism is the best to time buy and the time of maximum optimism is the best time to sell.

The time to sell an asset is when you have found a much better bargain to replace it.

From Investment Gurus, Peter J. Tanous

Have discipline

Have focus

Work hard, if you look at 10 investment ideas you will find 1 good one, if you look at 20 you will find 2, if you look at 100 you might find 10.

Allot appropriate amount of time for your research, investing and trading

Sell if the reasons why you bought the stock has changed or look at each position as you had bought today, would you still buy, if you can’t say yes consider selling.

From Winning on Wall Street, Martin Zweig

Let your profits run and cut your losses

Don’t fight the tape.

The trend is your friend.

Don’t swim against the tide

From Stocks for the Long Run, Jeremy J. Siegel

There is some evidence that contrarian strategies of increasing stock exposure when most investors are bearish and decreasing exposure when they are bullish can improve long-term results.

Small value stocks appear to significantly outperform small growth stocks.

There is evidence that many calendar anomalies persist over time, e.g., the January effect, the September effect, intra-month returns.

Stocks in the long-run, a lifetime, has outperformed all investment classes and will keep you ahead of inflation.

Start investing now and stay invested.

From What Works on Wall Street

Buying Wall Street’s current darlings with the highest price to earnings ratios is one of the worst things you can do.

Last year’s biggest losers are the worst stocks you can buy.

From John Neff on Investing, James P. O’ Shaughnessy

Reasons to sell

 -Fundamentals deteriorated

 -The price approached our expectations

 -Stick to a firm selling strategy

Play to your strengths

From It’s When You Sell That Counts, Donald Cassidy

Stop trying to protect your ego; focus on your capital

Overcome commission and tax phobia

Recognize crowd psychology

Take time out

Accept the irrelevance of your personal cost basis

Separate the stock and company

Know what institutions are doing

Know the anatomy of a loss

Have a price objective

Expect rotational group rotation

From Contrarian Investing, David Dreman

No stock position should be more than 5% of a portfolio

No industry or theme should be more than 20% of a portfolio

From Investment Titans, Jonathan Burton

It is better to hold a basket of unrelated investments. Diversification provides a smoother ride over time.

Minimize expenses

Investors who stay cool will outperform those who act emotionally

The market is not an accommodative machine and owes you nothing.

Optimism, overconfidence and confusing chance with skill are 3 of the biggest errors of judgment that investors make.

The future is unpredictable and you have to make decisions based on that assumption.