Ten commandments of William T. Ziemba on Investing.
1. Only bet when you have an edge.
2. Those who win on every trade are losers or liars. Making a profit involves taking small losses.
3. Know what you expect to gain from a trade before you enter, and know your exit point.
4. Do your research. The markets are predictable, but use the most contemporary data in models to achieve the best results.
5. Correlations between stocks and bonds are situational, and will not be replicated in all circumstances.
6. Evaluate the impact of all possible scenarios.
9. Have deep pockets – you need enough cash in reserve to survive crises. Follow a risk control system. If you focus on not losing, rather than on winning, you are more in control.
10. Accept small losses and exit before losses become too big.