The idea of rules based investing, or systematic investing, is not new. Ben Graham offered new and old methods that worked with each iteration of The Intelligent Investor. He also offered up different methods outside of the book too.

In my last post on following simple principles, Graham refers to an article he wrote about three such methods, along with a 50-year study he did. Out of curiosity, I dug around for the study, but only found the article.

His three methods were interesting, but Graham makes the point that the lesson is not that his three methods are the best or only methods that work. Rather, the lesson is that any systematic approach should work and continue to do so as long as it’s based on sound investing principles and three other requirements: Continue Reading…

The idea of following sound principles is one of the main lessons in The Intelligent Investor. The other, of course, is the cycle of optimism and pessimism in the markets. The sound principles help to avoid mistakes and think independent of the crowd.

The cycle is what gets people into trouble. Those basic principles get tossed aside for what appears to be something better. But with markets, there’s always something better. The shiny object syndrome exists around returns. There is always something outperforming, which causes people to pile in, only to watch it lose – literally and figurative – to something else. Continue Reading…