James Montier, a long-time favorite
among the readers of Investment Postcards, a while ago produced a white
paper entitled “The Seven Immutable Laws of investing”. In the paper,
the GMO strategist presents a set of principles to guide sensible
investment that I thought appropriate to revisit at this juncture.
The principles are:
1. Always insist on a margin of safety
2. This time is never different
3. Be patient and wait for the fat pitch
4. Be contrarian
5. Risk is the permanent loss of capital, never a number
6. Be leery of leverage
7. Never invest in something you don’t understand
Montier
concludes as follows: “I hope these seven immutable laws help you to
avoid some of the worst mistakes, which, when made, tend to lead
investors down the path of the permanent impairment of capital.”
