1. You Truly don’t have an investment strategy. Neither does your Broker…NOR DO THEY FOLLOW ONE!
2. Cut your losers short and let your winners run. WHEN TO SELL…RISK MANAGEMENT IS IMPORTANT!
3. Avoid predictions and forecasts: Humans are very bad at guessing what the future will bring. The academic literature overwhelmingly proves this.
4. Understand crowd behavior: The investor who understands the behavior of crowds has an enormous advantage over one who doesn’t. The Crowd is more wrong than RIGHT!
5. The trend is your friend: RELATIVE STRONGER SECTORS AND INVESTMENTS HISTORICALLY OUTPERFORM. WEAKER SECTORS AND INVESTMENTS UNDERPERFORM.
6. No one ever made a dime by panicking…YOUR EMOTIONS WILL COST YOU DEARLY IN RETURNS!
7. NEVER double-down ON LOSERS!
8. “INVESTMENT STRATEGIES” always stop working temporarily; stay with your strategy even when it is Temporarly Not Working.
9. Don’t own too many investments. Over-diversification is bad and waters down the return of good investments, and shows a lack of conviction of one’s ability and one’s investment strategy.
10. Buy when there is blood in the streets – but only after it has dried a little bit. RELATIVE STRENGTH RETURNS and the downward trend reverses…WAIT A LITTLE.
11. Never catch a falling knife. Don’t Buy investments trending down.
12. Leverage is Dangerous! (unless you’re doing risk-parity)