10 great investing rules from history
December 16, 2008
Remember that old adage to the effect that those who don't learn lessons from history are bound suffer avoidable hardship?
Learning the important lessons that history of investment offers, will rev up your investing profits. . .
1. Put all your eggs in one basket and watch that basket!
This saying comes from Mark Twain, but has been applied to stock market investment more or less verbatim by both John Maynard Keynes and Warren Buffett. Modern portfolio theory suggests that one can reduce risk by diversification.
However, if you were an active investor you would do better to concentrate your shareholdings in a limited number of companies which you feel you understand. This can actually reduce risk.
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