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Ten rules to guide investment decisions

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This week’s tips come to us from Contravisory Investment Management. Ed Noonan, the firm’s founder, developed these investing mantras after over 38 years in the industry.

  1. An approach which protects capital is the foundation of capital growth.
  2. Be skeptical of market pundits – they often suffer from a pride of personal opinion.
  3. Information is constantly changing; remain flexible in all investment operations.
  4. In seeking to avoid the dangers of crowd action remember that a majority of opinion can be sustained. Unanimity of opinion is more vulnerable to a contrary surprise.
  5. Never average down; you may be expanding a mistake more than opportunity.
  6. Be wary of “cheap” stocks (they have a knack of getting cheaper); “expensive” stocks are more often the winners.
  7. We all have biases; identify yours and how to use it to your advantage.
  8. Invest with the trend, not with the news.
  9. Superior returns are more likely when investing with the market leaders.
  10. Patience is a virtue when investors seek to identify long-term trends.