Deciding Better

I read on deciding better quite often. (more often than he updates it, but that’s beside the point). I really like the rational decision theory that James brings to the stock market.

So in reflection, he’s probably saved me some money by reminding me to stick to the investment objectives and guidelines that I decided on a long time ago.

  1. If it’s a good idea now, it should be a good idea in a week. If the opportunity horizon is less than a week, It’s not in my investment profile.

  2. Diversity pays. Lower the risk by not concentrating investment in any small number of stocks.

  3. Don’t move chunks of money in October, either for stock purchases or for initial mutual fund purchases. (It’s not rational, rather it’s a response to getting bitten before. One day, off 10% in a fairly diverse mutual fund)

  4. Dollar Cost Averaging, Tax Efficiency, Low Transaction Cost, and Long Term Investing are the Themes.

Not acting this week has saved me 10% in Apple stock. The last time I though Apple was a buy was in the dark days of $12 a share, red ink, and 1.25 price/book value. They’re close to that now, in terms of price to book value. I think they’re a buy, but I’m going to wait for the end of October to even ponder it.

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