James Montier, a long-time favourite among the readers of value investing, produced a white paper in March 2011, entitled “The Seven Immutable Laws of investing”.
In the paper, the investment strategist at the leading global investment management firm, GMO, presented a set of laws to guide investors towards investing sensibly in stock markets.
These laws are:
- Always insist on a margin of safety
- This time is never different
- Be patient and wait for the fat pitch
- Be contrarian
- Risk is the permanent loss of capital, never a number
- Be leery of leverage
- Never invest in something you don’t understand
These seven laws capture everything you need to become a smarter and successful investor.
I hope these help you to avoid some of the worst mistakes, which, when made, tend to lead investors down the path of permanent loss of capital.
Click here to read the white paper.
[…] the most important concept in value investing – ‘margin of safety’. Without this, any valuation calculation you perform will be […]