Part 2: The Investment Axioms 6-10

  By Matthew Jentner
Matthew Jentner

Last week, we reviewed 5 of the 10 investment axioms penned in April 2001 by retired author and editor, Marshall Loeb, of Time, Fortune and Money magazines, which, in my opinion, are as true today as they were when they were published.

You can review the first 5 axioms here.

And here you can read about the Ten Investment Axioms to Live By in Mr. Loeb’s own words.

Let’s review the others today.

  1. A well-balanced portfolio should be diversified among the major asset classes. Cash. Fixed income. Large and small companies. Growth and value. Domestic and international. The only guarantee is that some of these areas will periodically disappoint you. But you never know which ones or when. Your plan will succeed only if you stick to it and remain invested across several asset classes.
  2. Years of high returns can be completely reversed by one bad year. That’s why you shouldn’t use short-term criteria to judge long-term results. That can lead you to unknowingly creating a very high-risk portfolio. Ultimately, consistency is more important than an occasional home run.
  3. Traditional rules of investing are still true. While they can be adjusted periodically to fit finer points of the current investment environment, never abandon the core principles of diversification, sound values, patience, following a sound plan and maintaining a long-term perspective. Know the rules and know when you are breaking them.
  4. Raw information is not knowledge. Just knowing the facts won’t necessarily make you wiser.
  5. Market timing does not work. Moving in and out of markets based on anticipated changes in price as opposed to fundamental changes in value is speculation, not investing.

Marshall Loeb then makes a final note: “Investing your money requires discipline, patience, objectivity and a clear, documented investment policy.” I couldn’t agree more. Make a resolution to adhere to these words of wisdom as you work with your financial advisor in 2014.

For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s newest white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.