Do your homework or hire wise experts to help you

Franklin Templeton Investments  published book “16 RULES FOR INVESTMENT SUCCESS” that describe how Sir John Templeton invested his and his clients money.

Rule 8: Do your homework or hire wise experts to help you

Do your homeworkPeople will tell you: Investigate before you invest. Listen to them. Study companies to learn what makes them successful.

Remember, in most instances, you are buying either earnings or assets. In free-enterprise nations, earnings and assets together are major influences on the price of most stocks. The earnings on stock market indexes—the fabled Dow Jones Industrials, for example—fluctuate around the replacement book value of the shares of the index. (That’s the money it would take to replace the assets of the companies making up the index at today’s costs.)

If you expect a company to grow and prosper, you are buying future earnings. You expect that earnings will go up, and because most stocks are valued on future earnings, you can expect the stock price may rise also.

If you expect a company to be acquired or dissolved at a premium over its market price, you may be buying assets. Years ago Forbes regularly published lists of these so-called “loaded laggards.” But remember, there are far fewer of these companies today. Raiders have swept through the marketplace over the past 10 to 15 years: Be very suspicious of what they left behind.

Earlier on Tradingwisdoms

16 Rules For Investment Success – Sir John Templeton

Rule 1: Invest for maximum total real return – Sir John Templeton

Rule 2: Invest do not trade or speculate

Rule 3: Remain flexible and open minded about type of investment 

Rule 4: Buy Low

Rule 5: When buying stocks, search for bargains among quality stocks

Rule 6: Buy value, not market trends or the economic outlook

Rule 7: Diversify in stocks and bonds, as in much else, there is safety in numbers

Igor Marinkovic

Electronic engineer, futures trader and property investor and total beginner in making good web sites

One Comment

Comments are closed.