I just listened to the first part of a podcast by Paul Merriman on “10 Things Every Investor Should Know.” Here are the first five points:
1. There is no risk in the past. This is so true and yet people tend to forget this important detail.
2. Diversification is the only free lunch in the investment process. I think he’s off a little here. Diversification doesn’t always mean safety. Think back to 2008 when nearly every asset class dropped at the same time. But, in general, he is correct.
3. Investors should never take a risk that they can’t expect a premium for that risk.
4. There is always good news in the market and, there is always bad news.
5. Every investor should know what their primary goal is. This will help them stay on course and not be bothered by current market conditions.
I’ll post the next five as soon as they are available. Meanwhile, take some time to listen to his “10 Things Every Investor Should Know” podcast. Good stuff from Paul.