Wednesday, January 26, 2005

Two Easy Lessons for $1

As part of the $1.4 billion "global settlement" between the U.S. Securities and Exchange Commission and 10 of the nation's top investment firms, the securities firms promised to contribute $80 million over five years for a not-for-profit investor education program.
About a third of the $80 million will fund state education programs. That leaves about $53 million for a federal investor program to which Charles Ellis was appointed chairman.
According to the SEC, Ellis will receive compensation of $1 a year.

I just finished reading an article by Charles in the Financial Analyst Journal entitled "Investing Success in Two Easy Lessons".

Lesson # 1 - "plan your play and play your plan to win your game. And if you do not think and work that winning way in investing, you will, by default, be playing the loser's game of trying to beat the market - a game that almost every investor will eventually loose."

Lesson #2 - "large losses are forever in investing, teenage driving and in fidelity. If you avoid large losses with a strong defense, the winnings will have every opportunity to take care of themselves. And large losses are almost always caused by trying to get too much by taking too much risk"

As usual, Charles gives us way more than a dollar's worth...but what will we see for the other $52,999,999?

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