Many of you may know about George Washington's list of 110 Rules of Civility & Decent Behavior in Company and Conversation (if you don't, you can find it here). But how many of you knew that this extensive list includes some important lessons on investing?
OK, so there's really nothing about this list has to do with investing, but to have a little fun in celebration of Washington's birthday, I've twisted a few of the rules into important reminders about good investing.
Number 38: In visiting the Sick, do not Presently play the Physician if you be not Knowing therein.
Know what you know and know what you don't know. Do you need to have a doctor's level of expertise to buy a stock? Perhaps not, but buying a stock on a whim in an industry that you have no knowledge of is probably not going to end well.
Maybe you don't have to be a casino executive to invest in Las Vegas Sands
Similarly, you probably don't need an electrical engineering degree to buy SanDisk
Number 49: Use no Reproachful Language against any one neither Curse nor Revile.
I thought I'd use this as a nicely worded reminder to folks on the Yahoo! Finance message boards (and elsewhere on the Internet). Investing can be a stressful endeavor, but there's no need to channel your middle-school bully when interacting with other investors.
Number 50: Be not hasty to believe flying Reports to the Disparagement of any.
Let's go ahead and extend this from just disparaging rumors to all rumors -- particularly buyout rumors. Look, a takeover can be great, particularly if the price is right, because you get a quick jump in the stock price.
However, the excitement over takeover rumors can also lure in speculators, jack up the stock price, and then slam those Johnny-come-latelies when a deal never materializes. And just how often do buyout rumors lead nowhere? Very often. Earlier this month, SFGate.com reported that Akamai
Number 69: If two contend together take not the part of either unconstrained; and be not obstinate in your own Opinion, in Things indifferent be of the Major Side.
Very simply, if you endeavor to invest in individual stocks, you're going to be wrong sometimes (I've certainly had my share). As Washington's list reminds us here, you shouldn't be "obstinate in your own opinion," and for us that means being willing to admit that we're wrong and take action to prevent unnecessary losses.
Investment manager Whitney Tilson recently gave a very public display of how this is done as he closed out his short position in Netflix
Number 90: Being Set at meat Scratch not neither Spit Cough or blow your Nose except there's a Necessity for it.
This has nothing to do with investing, but just don't do it. Seriously. It's gross.
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