Everybody Should Have Their Investing Rules

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I found an interesting article titled “The Golden Rules Of Investing” while I was perusing the interweb today.  The basic premise of the article is that this gentleman is a mess when it comes to the market, and from the recent financial crisis he has gleaned ten (10) steadfast principles on investing.  They are:

1)      Thou cannot predict thy market

2)      Take a long-term view

3)      Keep adding to your investments – dollar cost averaging

4)      Your age should not dictate how you invest

5)      Rebalance your investments periodically

6)      Buy and sell gradually

7)      Use all-in-one funds to improve returns

8)      Avoid traps in employer sponsored retirement accounts

9)      Consider annuities for income, and

10)   Use ETFs

While I certainly agree with most of this list, some of it, I think, is a bit misguided.  For one, I think most investors should take a long-term view.  However, a long-term view is not what it used to be.  To me, long-term is one year, and not much more.  Furthermore, sometimes a short-term opportunity presents itself, and it is too good to pass up.

Finally, I do believe it is possible to time the market within a reasonable realm.  It’s difficult, but often the data will tell you it’s a bottom, or close to it.  When everybody is running for the exits, that’s when I want to walk into the theatre and catch a movie.  The same is true at market tops.  You don’t need to catch the absolute top or bottom, but you should try to be close.  Sometimes you just have to hold your nose, and go against the consensus.

On another interesting note, here is another article title “What Kind Of Investor Are You?”.  I think it goes well with this article.  Take a look at both, and let me know what you think.