Rules Of Thumb

Charlie Biello over at his Twitter feed recently came up with 20 Investment rules. I added a few of my own after listing his. Mine are in no particular order and I may come back and amend mine from time to time.

Markets move up and down.  That's what they do.  Every action will ultimately have a reactive move.  

Being overbought or oversold will ultimately be reversed.

Keep cash, especially if you know you're going to have a need for it in the next few years.  It is amazing how often the markets decline just when your need for that cash is the greatest.  

Know your capacity for risk.  If you can't figure that out then hire somebody who can help you do that.

Know your time frames.  Also know if you're an investor or trader.

Similar to Charlie's rule 17, nobody knows or can predict the future.  Those that claim to be able to do that are lying to you or lying to themselves.

I'm sure there are other rules that I'll think of as time passes so maybe I'll revisit this list on occasion.

Back Friday.