March 05, 2006

Ten Rules for Investing - Lindzon style

Writing about the markets for the last 7 years, 4 months on this blog, you start to pick up some trends in your writing and thinking that may really work with the proper discipline. Combined with actually managing a hedge fund, I have lost money in every imaginable way. I have managed a fund through a bubble, a bust, a recovery, a war, terrorism, rising rates, declining rates, and now a commodity boom. I have had some big winners, but gotten off the train too early or not put enough capital in the real winners. I have made way more mistakes during the years. Some of the rules than, should be those of avoidance.

1. Commission costs, even in the internet age of commission deflation, are a killer. Trade less!

2. Buy great brands on sale

3. When hunting for winners, like great brands, the less moving parts the better

4. Money management, the silent killer and the hardest one to put into action.

5. Have a catalyst - if the catalyst remains, stay with it.

6. Focus on trends - they don't have to be mainstream

7. You can't buy at the bottom or sell at the top - so don't try!

8. Avoid using leverage for the long haul, but use it for sprints.

9. Leverage your knowledge with your investments. Keep it simple.

10. Don't let one position put you out of the game. There is never a shortage of opportunity, just cash to start over when you need it!

I have decided on 10 rules because it is a nice round number and 10 seems like an amount you could post somewhere or remember. I will constantly refine the rules but try and keep at 10. I already see overlap but just want to post and refine over time. Over the next few weeks I hope to review my big winners and losers over the years as they apply to these rules and see why I am not retired yet from my winners and why my losses have hurt more than they should.

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