The Seven Immutable Laws of Investing

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.”