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Baruch's Guidelines

  • Don't speculate unless you can make it a full time job.
  • Beware of barbers, beauticians, waiters-of anyone- bringing gifts of "inside" information or "tips".
  • Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities of growth.
  • Don't try to buy at the bottom and sell at the top. This can't be done-except by liars.
  • 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.
  • Don’t buy too many different securities. Better have only a few investments that can be watched.
  • Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
  • Study your tax position to know when you can sell to greatest advantage.
  • Always keep a good part of your capital in a cash reserve. Never invest all your funds.
  • Don’t try to be a jack of all investments. Stick to the field you know best.

These “rules mainly reflect two lessons that experience has taught me- that getting the facts of a situation before acting is of crucial importance, and that getting these facts is a continuous job which requires eternal vigilance.

From Baruch: My Own Story by Bernard Baruch