10 rules to Win the “Loser’s Game”

Paul B. Farrell of MarketWatch reminds us of a good list of strategies, courtesy of Charles Ellis’ classic "Winning the Loser’s Game: Timeless Strategies for Successful Investing."

1. Never, never speculate.
2. Your home is not a stock.
3. Save lots more.
4. Brokers aren’t your friends.
5. Never trade commodities.
6. Avoid new and exciting deals.
7. Bonds also ride up and down.
8. Never invest for tax benefits.
9. Write goals and stick to them.
10. Never trust your emotions.

Farrell notes that several investing luminaries have heaped praise on the book: "Management guru Peter Drucker calls it "the best book on investment policy and management." Jack Bogle credits Ellis’s book as the inspiration for his first index fund in 1976.

Ironically, the book was written in 1975 in order to help his fellow money managers "improve their game."

Perhaps it will improve yours as well.


You can win ‘The Loser’s Game’
Let Ellis’ classic 10 rules guide your strategy
By Paul B. Farrell,
MarketWatch, 6:17 PM ET July 10, 2005

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  1. royce commented on Aug 21

    That list doesn’t include one of the biggest elements of Ellis’ book, which was the advice to invest in index funds. Since an index was made up of the collective valuation of highly sophisticated and knowledgeable investors, Ellis said, an amateur investor who sought to beat it would have to consistently find errors in the valuations made by these professionals, a task he saw as being beyond almost ALL investors, let alone the average man on the street.

  2. Larry Nusbaum, Scottsdale commented on Aug 21

    There is such power in #3: Save lots more.
    I would add: Save 50% of every dollar earned in your 30’s and prior to marriage. And, put the savings into investments.
    Exit strategy for the S&P 500: Violation of the 200MA.
    Exit strategy for real estate: DEATH

  3. muckdog commented on Aug 21

    Your home is a place to live, not an investment… I think more folks will realize this soon. Good list of things, though. And I like the idea of low-cost index funds mentioned above. Not sure about the 200dma thing. But…

  4. bobby commented on Aug 21

    Good advice for lazy people or for the clueless.

  5. Mark T commented on Aug 22

    your home is an investment to the extent that it represents deferred shelter. I f you don’t own your home you need an index linked asset that will allow you to rent one. Generally the wisdom of crowds is that the best asset to match the future liability of renting a home is to own one. In effect saving 50% of your income in your 30s by running a large mortgage is accumulating an essential part of the stock of assets you need to have when you retire.

  6. Larry Nusbaum, Scottsdale commented on Aug 22

    2. Your home is not a stock. (TRUE) It doesn’t say: “Your home is a place to live, not an investment…”
    In fact, your home is an investment of sorts. You put some money in when you buy. Then, borrow the balance. You can write off the annual interest. And, when it appreciates you can borrow more or sell it with tax advantages for a profit.
    I remember meeting realtors in California who got rich trading up every two years, for years. Don’t tell them it’s not an investment. It’s just not in the same classification as investment/income property.

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