Rules to follow during banking-blues

However, during times like these, sticking to investment rules becomes even more crucial. In this article, we'll take a closer look at why it's important to stay disciplined during troubled times and what investment rules you should follow to protect your portfolio.

There are many different strategies and philosophies when it comes to investing, but some of the most successful investors of all time have shared their own rules and principles for making wise investment decisions. Here are five of the most important rules for investing, as espoused by John Templeton, Benjamin Graham, and Warren Buffett.

1. Buy low, sell high

This is a fundamental principle of investing that is often easier said than done. Benjamin Graham, the father of value investing, advocated for buying stocks that are undervalued by the market. He believed stocks had an intrinsic value that could be determined by analysing a company's financial statements, industry trends, and economic conditions. By buying stocks that were trading below their intrinsic value, Graham believed that investors could realise a profit when the market eventually recognised the true value of the stock.

Warren Buffett has famously said that his favourite holding period for a stock is "forever." This doesn't mean that he never sells a stock, but rather that he buys with the intention of holding for the long term. Buffett believes that by focusing on a company's fundamentals and investing in quality businesses, investors can ride out short-term market fluctuations and enjoy the benefits of compounding returns over time.

2. Diversify your portfolio

John Templeton was a pioneer in global investing and believed that investors should diversify their portfolios across countries and asset classes. He famously said, "The only investors who shouldn't diversify are those who are right 100% of the time." Diversification helps reduce risk by spreading your investments across different assets and industries.

Buffett also emphasises the importance of diversification, but he cautions against over-diversifying. He believes investors should focus on their "circle of competence" and only invest in businesses they understand. By doing so, investors can make informed decisions about the companies they invest in and avoid spreading themselves too thin.

3. Focus on the long term

All three investors stress the importance of taking a long-term view when it comes to investing. Templeton believed successful investors should be patient and willing to wait for the right opportunities to present themselves. He famously said, "The four most dangerous words in investing are: 'this time it's different.'"

Guide to the Markets – U.S. Data are as of April 7, 2020

Source: FactSet, NBER, Robert Shiller, J.P. Morgan Asset Management

Graham believed that investors should focus on a company's earnings and dividends over a period of years rather than just looking at short-term price fluctuations. He believed this approach would allow investors to identify quality businesses undervalued by the market.

Buffett is also known for his long-term perspective. He has said that he tries to buy stocks that he would be comfortable holding for ten years, regardless of what the market does in the short term. By taking a patient approach, investors can avoid making impulsive decisions and allow their investments to grow over time.

4. Keep emotions in check

Investing can be an emotional rollercoaster, but successful investors know how to control their emotions. Graham believed investors should be "fearful when others are greedy and greedy when others are fearful." This means that investors should avoid getting caught up in market hype and instead focus on the fundamentals of the companies they invest in.

Templeton also believed that emotions could be a hindrance to successful investing. He advised investors to "buy at the point of maximum pessimism" and to sell when everyone else was buying. By going against the crowd, investors can often find bargains that others have overlooked.

5. Be disciplined and stick to your strategy

Another important rule that all three investors shared was the importance of discipline and sticking to your investment strategy. This means having a clear plan for how you will invest, and sticking to that plan even when the market is volatile, or your investments are underperforming. Graham was known for his strict adherence to his value investing principles, and Templeton was known for his disciplined approach to investing. Buffett is perhaps the best example of this, as he has stuck to his long-term strategy for decades, even when it has led to short-term underperformance.

In conclusion, while investing can be a rewarding and exciting endeavour, it can also be challenging and stressful, especially during turbulent market conditions. By following the rules outlined by investment legends like John Templeton, Benjamin Graham, and Warren Buffett and by seeking the help of trusted advisors, investors can feel confident that they are making smart, informed decisions about their investments and positioning themselves for long-term success. So don't let turbulent market times discourage you from pursuing your investment goals – instead, seek out the help you need to navigate these challenges and emerge stronger on the other side.