Legendary investment icon, Sir John Templeton lived by a set of 16 investment rules. Together, his 16 rules make up one of the best roadmaps I know to becoming an emerging mar
kets millionaire and enjoying international investing success. Templeton’s basic philosophy for building wealth by investing in stocks still holds true. It’s still, “Buy low, sell high”
Here’s Part III of my four-part series, recapping Templeton’s 16 Investment Rules No. 9 through No.12:
No. 9: Aggressively monitor your investments
The big takeaway here is that no investment is forever. Economic circumstances change. Business models change. Bull markets turn to bear markets. If you want to hold on to your money, you need to constantly evaluate your portfolio. That’s not to say you should be trading in and out of the market on a hair trigger. You just want to make sure you’re not complacent.
No. 10: Don’t panic
Sometimes you won’t have sold when everyone else is buying, and you’ll be caught in a market crash like we had in 2008. During the course of your investing career, the market will correct. Stocks will fall. This doesn’t matter. What counts is how you react. When everyone else is panicking, successful investors calmly look over their holdings and think: “I wanted to own this stock before it crashed. Has anything changed now that it’s cheaper?” If you’ve done your research, chances are nothing has changed. Panicky markets just put the stock “on sale” – creating an even better buying opportunity.
No. 11: Learn from your mistakes
Learning from your mistakes is the only way to become a better investor. Figure out what went wrong. And learn from it. Stay away from advisers who tell you “this time it’s different.” These are the four most costly words in investing! The big difference between those who are successful and those who are not is that successful people learn from their mistakes and the mistakes of others.
No. 12: Begin with a prayer
The Presbyterian Church played an important role in Templeton’s life and career. He believed that “if you begin with a prayer, you can think more clearly and make fewer mistakes.” You don’t have to be a Christian to follow Templeton’s advice. You just have to find some calm in your day. This will help you focus on what’s really important.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.