Sir John Templeton's list for investment success

1. If you begin with a prayer, you can think more clearly and make fewer mistakes.Templeton was, and is, a devout Christian. His foundation that he has set up is one of the leading Christian philanthropic groups and advances a number of Christian causes. Some may find this may be off-topic for an investment FAQ, but nevertheless it is Sir John Templeton’s first rule.2. Outperforming the market is a difficult task.The Challenge is not simply making better investment decisions than the average investor. The real challenge is making investment decisions that are better than those of professionals who manage the big institutions.3. Invest – don’t trade or speculate.The stock market is not a casino but if you move in or out of stocks every time they move a point or two, the market will be your casino and you may lose eventually or frequently.4. Buy value, not market trends or economic outlook.Ultimately, it is the individual stocks that determine the market, not vice versa. Individual stocks can rise in a bear market and fall in in bull market. So buy individual stocks, not the market trend or economic outlook.5. When buying stocks search for bargains among quality stocks.Determining quality in stock is like reviewing a restaurant. You don’t expect it to be 100% perfect, but before it gets three or four stars you want to be superior.6. Buy Low.So simple in concept. So difficult in execution. When prices are high, a lot of investors are buying a lot of stocks. Prices are low when demand is low. Investors have pulled back, people are discouraged and pessimistic. But, if you buy the same securities everyone else is buying, you will have the same results as everyone else. By definition, you cant outperform the market.7. There’s no free lunch. Never invest on sentiment. Never invest solely on a tip.You would be surprised how many investors do exactly this. Unfortunately there is something compelling about a tip. Its very nature suggests inside information, a way to turn a fast profit.8. Do Your homework or hire wise experts to help you.People will tell you: investigate before you invest. Listen them. Study companies to learn what makes them successful.9. Diversify – by company, by industry. In stocks and bonds, there is safety in numbers.No matter how careful you are, you can neither predict or neither control the future. So you must diversify.10. Invest for maximum total return.This means the return after taxes and inflation. This is only rational objective for most long-term investors.11. Learn from your mistakes.The only way to avoid mistakes is not to invest- which is the biggest mistake of all. So forgive yourself for your errors and certainly don’t try to recoup your losses by taking bigger risks. Instead turn each mistake into a leaning experience.12. Aggressively monitor your investments.Remember no investment is forever. Expect and react to change. And there are no stocks that you can buy and forget. Being relaxed doesn’t mean being complacent.13. An investor who has all the answers doesn’t even understand all the questions.A cocksure approach to investing will lead, probably sooner than later to disappointment if not outright disaster.14. Remain flexible and open minded about types of investment.There are times to buy blue chip stock, cyclical stocks, convertible bonds and there are times to sit on cash. The fact is there is no one kind of investment that is always best.15. Don’t panic.Sometimes you won’t have sold when everyone else is buying and you will be caught in a market crash. Don’t rush to sell the next day. Instead study your portfolio. If you can’t find more attractive stocks, hold on to what you have.16. Do not be fearful or negative too often.

There will, of course, be corrections, perhaps even crashes. But over time our studies indicate, stocks go up. It always “buy low, sell high”.