Sunday, June 26, 2011

The 10 Maxims of Successful Investing

Weekend: The 10 Maxims of Successful Investing
By Steve Christ | Saturday, June 25th, 2011

Templeton's 10 Maxims

He called them Templeton's 10 Principles for Successful Investing. They included the following:

Invest for real returns: “The true objective for any long-term investor is maximum total real return after taxes.”

Keep an open mind: “Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and skeptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.”

Never follow the crowd: “If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce superior performance unless you do something different from the majority. Buying when others are despondently selling and selling when others are greedily buying requires the greatest fortitude and pays the greatest reward.”

Everything changes: “Bear markets have always been temporary. And so have bull markets.”

Avoid the popular: “When any method for selecting stocks becomes popular, you will need to switch to unpopular methods.”

Learn from your mistakes: “'This time is different' are among the most costly four words in market history.”

Buy during times of pessimism: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

Search worldwide: “To avoid having all your eggs in the wrong basket at the wrong time, you should diversify. When you search worldwide, you find more better bargains than when you monitor only one nation. You also benefit from more safety thanks to diversification.”

Hunt for value and bargains: “Too many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling.”

No-one knows everything: “An investor who has all of the answers doesn't even understand the questions.”

Of course, those aren't the only words of wisdom Templeton had to offer. He also once said, "It's nice to be important, but it is more important to be nice."

Templeton passed away in July 2008 at the age of 95.

As for some places to start building a lifetime of wealth, our editors have put together a few of their best ideas for the years to come in this week's top-read articles from Wealth Daily and Energy & Capital, below.

Have a great weekend.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily