Bernard Mannes Baruch was an American financier and statesman. According to historian Thomas A. Krueger: For half a century Bernard Baruch was one of the country’s richest and most powerful men. Bernard Baruch has made millions in the US bull market in stocks since 1924. However, he started anticipating a Wall Street crash as early as 1927 and sold stocks short periodically in 1927 and 1928.
Baruch would reiterate his life lessons in a list of rules on how to invest. The list is pulled from the lessons he learned over a lifetime in the markets. Here are his ten investment rules:
- Don’t speculate unless you can make it a full-time job.
- Beware of barbers, beauticians, waiters — of anyone — bringing gifts of “inside” information or “tips.”
- Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities of growth.
- Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.
- Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.
- Don’t buy too many different securities. Better have only a few investments that can be watched.
- Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
- Study your tax position to know when you can sell to the greatest advantage.
- Always keep a good part of your capital in a cash reserve. Never invest all your funds.
- Don’t try to be a jack of all investments. Stick to the field you know best.
These “rules” mainly reflect two lessons that experience has taught him — that getting the facts of a situation before acting is of crucial importance, and that getting these facts is a continuous job that requires eternal vigilance.