Seven more rules for investment success

Sir John Templeton

Following on from last week, here are seven more rules Sir John Templeton learned as a professional investor. 1.

Expect and react to change. No bull or bear market is permanent. And there are no stocks that you can buy and forget. Being relaxed doesn’t mean being complacent. Look at the 100 largest industrials on Fortune magazine’s list. From 1983 to 1990, 30 dropped off the list. They merged with another giant company, or became too small for the top 100, were acquired by a foreign company, went private, or went out of business. No investment is forever. 2.

Sometimes you won’t have sold when everyone else is buying, and you’ll be caught in a market crash. Don’t rush to sell the next day. The time to sell is before the crash, not after.

Instead, study your portfolio. If you didn’t own these stocks now, would you buy them after the market crash? Chances are you would. So the only reason to sell them now is to buy other, more attractive stocks.

If you can’t find more attractive stocks, hold on to what you have. 3.

The only way to avoid mistakes is not to invest – the big-

Monitor your Don’t panic investments Learn from your mistakes

gest mistake of all. So forgive yourself for your errors. Don’t become discouraged or try to recoup your losses by taking bigger risks. Instead, turn each mistake into a learning experience. Determine what went wrong and how you can avoid the same mistake again. 4.

If you begin with a prayer, you can think more clearly and make fewer mistakes. 5.

A cocksure approach to investing will lead to disappointment if not outright disaster. Everything is in a constant state of change; the wise investor recognises success is a process of continually seeking answers to new questions. 6. Never invest on sentiment. The company that gave you your first job, or built the first car you ever owned may be a fine company, but that doesn’t mean its stock is a fine investment. Even if the corporation is truly excellent, prices of its shares may be too high. Never invest solely on a tip. 7.

Don’t be fearful or negative too often. There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks go up and up.

Begin with a prayer An investor with all the answers doesn’t understand all the questions

Over time, our studies indicate stocks go up and up

There’s no free lunch Don’t be fearful or negative too often