Hedge fund manager Doug Kass gives people some needed reminders:
1. Above all, do your own homework! Do not rely on television
commentators, strategists, biased money managers (who are talking their book!) in your decisions. Do your own
research. Use the significant resources on the Internet to
2. Use old-fashioned common sense! If things look too good, they
probably are and will turn down. If things look too bad, they
probably will turn around and improve.
3. Don’t be afraid to be a contrarian — in small doses! When everyone
(and their entire family) is long a sector or is avoiding a sector (and is
exceptionally glib about it), it should be a sign to go the other way.
4. Let your gains run and stop your losses! — Don’t average down.
5. Be a cynic and remain skeptical even when the good times are
apparent! This especially true as it relates to government statistics.
6. Let speculation be your guide! If investors all around you are
losing their heads, don’t lose yours.
7. Read and reread the classic
books on investing! In bull markets, the historical perspective is
disregarded. But in bear markets, or
volatile markets, the history lessons are invaluable as market
conditions/influences are nearly always repeated.
8. When times are tough (like the present), do not press your investments
and do not overtrade! Mr. Market will be back up and running tomorrow …
and the next day.
9. In uncertain times do a simple piece of homework: Reassess why you own
each investment! Omega Advisors’ Leon Cooperman taught me to draw a line in
the middle of a page and list how you view the assets and liabilities for the
markets and for each individual investment.
10. Do not forget point #1!
Ten Lessons to Be Learned in
the Recent Market Decline
Street Insight, 10/6/2005 7:43 AM