James Montier’s The Seven Immutable Laws of Investing


 

wealthymatters.comJames Montier expounds The Seven Immutable Laws of Investing to help investors  avoid some of the worst mistakes, which, when made, tend to lead them down the path of the permanent impairment of capital.They are as follows:

1. Always Insist on a Margin of Safety

Valuation is the closest thing to the law of gravity in finance .It is the primary determinant of long-term returns. The objective of investment (in general) is not to buy at fair value, but to purchase with a margin of safety.This reflects that any estimate of fair value is just that: an estimate, not a precise figure, so the margin of safety provides a much-needed cushion against errors and misfortunes. When investors violate this law by investing with no margin of safety, they risk the prospect of the permanent impairment of capital. Read more of this post

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