Winning the Loser's Game

Charles D. Ellis, MBA, PhD, published an updated version of his investment classic, Winning the Loser's Game: Timeless Strategies for Successful Investing, in 2002. In the book, Ellis, the founder and former managing partner of Greenwich Associates, a strategic consulting and research firm, lays out some simple rules for the individual investor, rules

“The four most dangerous words in investing are: It’s different this time.”—John Templeton

Charles D. Ellis, MBA, PhD, published an updated version of his investment classic, Winning the Loser’s Game: Timeless Strategies for Successful Investing, in 2002. In the book, Ellis, the founder and former managing partner of Greenwich Associates, a strategic consulting and research firm, lays out some simple rules for the individual investor, rules that are as valid in today’s market as they were six years ago.

Investing is a loser’s game, according to Ellis, because amateurs (the individual investors) are competing with professionals (the institutional investors). Individuals tend to sabotage their investment results by hunting for hot stocks and funds, overreacting to financial news (both good and bad), and relying on past performance instead of fundamentals. To level the playing field, Ellis maintains that the individual investor must be aware of some simple rules. Here are some samples:

• Don’t trust your emotions.

• Put your investment strategies and your financial goals in writing and stick to them.

• Limit the amount you invest—don’t bet the farm.

• Don’t make any investment moves that are primarily for tax reasons.

• Don’t assume your broker or financial advisor has your best interests in mind.

• Remember that your home is a place to live, not an investment

• Beware of new or “interesting” investments.

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