James Montier of GMO, LLC recently penned a piece titled “The Seven Immutable Laws of Investing.” These “laws” are certainly not new to adherents of value investing. However, I believe we need to constantly reinforce these laws, especially since they are often inconsistent with our natural tendencies.
So, now, for the moment of truth, I present a set of principles that together form what I call The Seven Immutable Laws of Investing.1. Always insist on a margin of safety2. This time is never different3. Be patient and wait for the fat pitch4. Be contrarian5. Risk is the permanent loss of capital, never a number6. Be leery of leverage7. Never invest in something you don’t understand
Hi there,
ReplyDeleteThis is a wonderful blog you've maintained. But recently you've not posted anything, may I ask you why?
I agree with all the points. Specially no. 6. because last year I zeroed upon a company which seemed to be a great value buy. But its price has not moved anywhere till now - a value trap I must say.
Later I realized that it's high on debt and equity dilution is also considerable.
If possible do check out my blog on value investing too. I would love to hear from you.
Regards,
Sunil