The 7 Golden Rules of Investing

Louis Ehrenkrantz started as a high school English teacher and became a prominent stockbroker. He has been known for his ability to predict social and political developments — and identify companies that would benefit most from those events. These are the rules he adopted.

1. Reading. The more you read, the more you will increase your chances to find successful companies.
2. Don’t over-diversify. Ehrenkrantz states that 10 stocks in at least 3 sectors are enough for the average investor. Note: I do not personally follow this rule. I think that concentration is overrated. Buying lots of stocks is a fine strategy.
3. Stick with your winners. Do not automatically sell when the stock hits a target price but continue to hold as long as it performs well and has good prospects for the future.
4. Sell your losers. No one wants to sell for a loss. It’s an admission that you made a mistake. But if you can set your ego aside, you can take a minor loss and still be fit enough, both financially and mentally, to invest the next day.
5. Look for top quality out of your favourite companies. Companies that have high-quality products/ services or in the process of bringing high-quality products/ services to market.
6. Don’t mess with your portfolio. Ehrenkrantz recommends checking your portfolio’s performance once or twice a year, as the long-term focus is the goal.
7. Be an optimist. In investing — as in most things in life — being an optimist will serve you more than it will hurt you.