Some good insights from a guy named Barry Ritholtz. He writes a blog or something. You may have heard of him:
BR’s Guide to Simple Investing
1. Use ETFs to get equity exposure more often than picking individual stocks.
2. Valuation when making purchases matters more than anything else I can think of to your long term investing success.
3. Low Cost passive investing, dollar cost averaging into 5 broad indices (Big cap, tech, emerging markets, fixed income, etc.) is ideal for do it yourself investors.
4. Rebalance across various asset classes regularly. Do so at least annually, preferably quarterly. (Online tools for doing this should drive your broker selection).
5. Keep your Costs and Expenses low. This may be the only free lunch in all of investing.
6. Reduce your Turnover level; keep it low (this helps with #5, plus most of these)
7. Avoid the Noise: Reduce your consumption of useless chatter, be it in print or on TV. Classic investing books are vastly superior to ephemeral market gossip.
8. Review your portfolio regularly. Check your allocations monthly. To see how your holdings are doing, use weekly, not daily charts.
9. Venture Capital and Private Equity ain’t easy — if you lack the skills, capital and risk tolerance, avoid them.
9B. Most IPOS are a sucker game.
10. Avoid new financial products at all costs.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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