Lessons from the Past

What is impossible to describe are the hundreds of books, articles, videos, podcasts and seminars that I have read, watched, listened to and attended over the years on the markets that allowed for this ‘evolution’ to take place. Instead what may help is an article that I have titled "Lessons from the Past" an alphabetical compilation of the famous advice provided by the greatest investors of all time. These are the actual rules and suggestions passed down from these market legends and are in no way my own thoughts or opinions. The similarities in the advice given by these legends on the other hand is quite striking.

Jesse Livermore’s 21 Trading Rules.

John Bogle’s 7 Rules for Successful Stock Market Investing.

Philip Carret’s 12 Commandments of Investing.

Sir John Templeton's 16 Rules for Investment Success. 

James Montier’s 7 Immutable Laws of Investing.

Pat Dorsey’s 5 Rules for Successful Stock Investing.

Bob Farrell’s 10 Market Rules to Remember.

John Maynard Keynes 3 Rules for Successful Investing.

Bernard Baruch’s 10 Rules of Investing.

Charlie Munger’s 10 Point Checklist for Investing.

Peter Lynch’s 25 Golden Rules for Investing.

Warren Buffett's 4 Investment Pillars.

1. A stock-market decline is as routine as a January blizzard in Colorado. If you’re prepared, it can’t hurt you. A decline is a great opportunity to pick up the bargains left behind by investors who are fleeing the storm in panic.
2. Aggressively monitor your investments.
3. Allocate assets wisely - Proper allocation of capital is an investor’s No. 1 job.
4. Always insist on a margin of safety.
5. Always keep a good part of your capital in a cash reserve. Never invest all your funds.
6. An investor who has all the answers doesn’t even understand all the questions
7. Analyze rigorously - Use effective checklists to minimize errors and omissions.
8. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.
9. At least once in six months reappraise every security held.
10. Avoid hot stocks in hot industries. Great companies in cold, non-growth industries are consistent big winners.
11. Avoid inside information as you would the plague.
12. Be contrarian.
13. Be decisive - When proper circumstances present themselves, act with decisiveness and conviction.
14. Be independent - Only in fairy tales are emperors told they’re naked.
15. Be leery of leverage.
16. Be patient and wait for the fat pitch.
17. Be quick to take losses, reluctant to take profits.
18. Be ready for change - Live with change and accept unremovable complexity.
19. Be specific on your objectives and timeframe.
20. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend.
21. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.
22. Begin with a prayer.
23. Beware of barbers, beauticians, waiters — of anyone — bringing gifts of inside information or tips.
24. Big movements take time to develop.
25. Borrow money sparingly and only when stocks are low, money rates low or falling, and business depressed.
26. Bull markets are more fun than bear markets.
27. Buy low.
28. Buy right and hold tight. Once you set your asset allocation, ignore moves in the market. Stick to the plan.
29. Buy value, not market trends or the economic outlook.
30. Consider yield the least important factor in analyzing any stock.
31. Diversify. In stocks and bonds, as in much else, there is safety in numbers.
32. Do not be too fearful or negative too often.
33. Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.
34. Do your homework or hire wise experts to help you.
35. Don’t buy too many different securities. Better have only a few investments which can be watched.
36. Don’t fight the last war. What worked in the past is no predictor of what will work in future. The past is not prologue.
37. Don’t panic.
38. Don’t speculate unless you can make it a full-time job.
39. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.
40. Don’t try to be a jack of all investments. Stick to the field you know best.
41. Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.
42. Don't be fooled into thinking that timing is everything.
43. Don't put all your eggs in one basket.
44. Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.
45. Excesses in one direction will lead to an opposite excess in the other direction.
46. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
47. Fear and greed are stronger than long-term resolve.
48. Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.
49. Focus on value' stocks, particularly big dividend payers.
50. For all long-term investors, there is only one objective – maximum total real return after taxes.
51. Forget the needle, buy the haystack. Don’t waste time buying individual stocks or stock funds. Cut your risk by purchasing broad-based index or exchange-traded funds.
52. Get time on your side. The biggest enemy to successful investing is procrastination.
53. Have intellectual humility - Acknowledging what you don’t know is the dawning of wisdom.
54. Have patience - Resist the natural human bias to act.
55. Have realistic expectations. Rates of return in the coming decade are likely to be lower than the last. A seven per cent annual return before costs and inflation for stocks and a 2.5 per cent return for bonds before costs and inflation is reasonable.
56. I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.
57. If the business does well, the stock eventually follows.
58. If you can’t find any companies that you think are attractive, put your money in the bank until you discover some.
59. If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.
60. If you don’t study any companies you have the same chance of success buying stocks as you do in a poker game if you bet without looking at your cards.
61. If you invest $1,000 in a stock, all you can lose is $1,000, but you stand to gain $10,000 or even $50,000 over the time you’re patient.
62. You need to find a few good stocks to make a lifetime of investing worthwhile.
63. If you study 10 companies, you’ll find one for which the story is better than expected. If you study 50, you’ll find five. 
64. There are always pleasant surprises to be found in the stock market – companies whose achievements are being overlooked on Wall Street.
65. Ignore mechanical formulas for valuing securities.
66. In every industry and every region, the observant amateur can find great growth companies long before the professionals have discovered them.
67. Invest – don’t trade or speculate.
68. Invest for maximum total real return.
69. It is much easier to watch a few than many.
70. It is not good to be too curious about all the reasons behind price movements.
71. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
72. Keep at least half the total fund in income producing securities.
73. Keep your portfolio very different from the broader stock market.
74. Learn from your mistakes.
75. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.
76. Long shots almost always miss the mark.
77. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
78. Markets are never wrong – opinions often are.
79. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
80. Markets tend to return to the mean over time.
81. Measure risk - All investment evaluations should begin by measuring risk, especially reputational.
82. Minimize the croupier’s take. Minimize fees by investing in low-cost, low turnover funds. This increases your return.
83. Money cannot consistently be made trading every day or every week during the year.
84. Never average losses.
85. Never buy a stock because it has had a big decline from its previous high.
86. Never hold fewer than ten different securities covering five different fields of business.
87. Never invest in a company without understanding its finances. The biggest losses in stocks come from companies with poor balance sheets.
88. Never invest in something you don’t understand.
89. Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available.
90. Never sell a stock because it seems high-priced.
91. Nobody can predict the interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what‘s actually happening to the companies in which you’ve invested.
92. Nothing new ever occurs in the business of speculating or investing in securities and commodities.
93. Often, there is no correlation between success of a company’s operations and the success of its stock over a few months or even years. In the long term, there is 100% correlation between the success of the company and the success of the stock. This disparity is the key to making money; it pays to be patient and to own successful companies.
94. One should never permit speculative ventures to run into investments.
95. Our favorite holding period is forever.
96. Outperforming the market is a difficult task.
97. Over the past three decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd.
98. Owning stock is like having children – don’t get involved with more than you can handle. The part-time stock picker probably has time to follow 8-12 companies, and to buy and sell shares as conditions warrant. There don’t have to be more than five companies in the portfolio at any one time.
99. Prepare ahead - The only way to win is to work, work, work, and hope to have a few insights.
100. Remain flexible and open-minded about types of investments.
101. Remember reversion to the mean. Selecting your fund from yesterday’s winners is fraught with peril. Over the long run, reversion to the market average is inevitable.
102. Risk is the permanent loss of capital, never a number.
103. Rule number one: never lose money. Rule number two: never forget rule number one.
104. Seek facts diligently, advice never.
105. Set aside a moderate proportion of available funds for the purchase of long-term options on stocks of promising companies whenever available.
106. Stay focused - Keep it simple and remember what you set out to do.
107. Stay invested and don't try to time the market.
108. Stay the course. The secret to successful investing isn’t forecasting or good stock or fund-picking. It is about making a plan, sticking to it, eliminating unnecessary risks, and keeping your costs low.
109. Study your tax position to know when you can sell to greatest advantage.
110. The hedgehog beats the fox. Foxes are sly and represent financial institutions that sell complicated products and charge high fees for advice. A hedgehog does one thing when threatened — he curls up into a spiny ball. Simple, but effective, like an index fund.
111. The human side of every person is the greatest enemy of the average investor or speculator.
112. The leaders of today may not be the leaders of two years from now.
113. The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.
114. The public buys the most at the top and the least at the bottom.
115. The real money made in speculating has been in commitments showing in profit right from the start.
116. There are no new eras — excesses are never permanent.
117. There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of newscasters. Sell a stock because the company’s fundamentals deteriorate, not because the sky is falling.
118. There’s no escaping risk. There’s no wealth without risk. If you don’t save, you’ll end up with nothing. And if you don’t invest for your retirement, your savings will be depleted by inflation.
119. There’s no free lunch.
120. This time is never different.
121. Time is on your side when you own shares of superior companies. You can afford to be patient – even if you missed Walmart in the first five years, it was a great stock to own in the next five years. Time is against you when you own options.
122. Time is your friend. Start early, stick to a plan and ignore the chatter of the day. Let the miracle of compound interest work for you.
123. Use the wisdom of experts.
124. When all the experts and forecasts agree — something else is going to happen.
125. When buying stocks, search for bargains among quality stocks.
126. When stocks are high, money rates rising, business prosperous, at least half a given fund should be placed in short-term bonds.
127. Wishful thinking must be banished.
128. With small companies, you’re better off to wait until they turn a profit before you invest.
129. You have to know what you own, and why you own it.
130. Your investor’s edge is not something you get from Wall Street experts. It’s something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand.