In this missive I present a set of principles that have always guided sensible investment that, together, form what I call The Seven Immutable Laws of Investing. [Incidentally, immutable means “not subject or susceptible to change or variation in form or quality or nature.”] I hope they help you to avoid some of the worst mistakes, which, when made, tend to lead investors down the path of the permanent impairment of capital. Right now, I believe the laws argue for caution. [Let me explain.]
So says James Montier in an article* published in www.frontlinethoughts.com which Lorimer Wilson, editor of www.munKNEE.com, has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Montier goes on to list the laws and comment on each as follows:
- Always insist on a margin of safety
- This time is never different
- Be patient and wait for the fat pitch
- Be contrarian
- Risk is the permanent loss of capital, never a number
- Be leery of leverage
- Never invest in something you don’t understand
Let’s briefly examine each of them, and highlight any areas where investors’ current behavior violates one (or more) of the laws.
To read more of this article please go here.