Winning..at
a loser's game
Investing is a loser's game, according to Author, Charles
Ellis, because amateurs(individual investors) are competing
with professionals (institutional investors). Individuals
also tend to sabotage their own investment results by hunting
hot stocks, overreacting to financial news (both good and
bad), and relying on past performance instead of fundamentals.
To level the playing field, Ellis has a few rules for the
individual investor. Here are some samples:
Don't trust your emotions.
Put your investment program and your financial goals in writing,
and stick to them.
Limit the amount you invest—don't bet the farm.
Don't do anything that is primarily for tax reasons.
Don't assume your financial advisor has your best interests
in mind.
Remember that your home is a place to live,
not an investment.
Never invest in commodities.
Beware of new or “interesting” investments.
from Charles D. Ellis, author of Winning the Loser's
Game, (McGraw-Hill; 2002)
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