Wouldn't it be great if you could get some pearls of investment advice from someone who invested for 70 years and beat the market average soundly? Well, you can.
Meet Philip Carret, who started Pioneer, one of the first mutual funds, in 1928. His average annual return, calculated from 1928 to 1974, is estimated to be 14 percent. That's pretty impressive, considering that the stock market in general averages only an 11 percent annual return. Carret died this year at the age of 101, but he left behind many thoughts on what contributes to successful investing:
-"Never borrow money for speculation in stocks. When you do borrow, do so sparingly, and only when rates are low or falling and business is depressed."
-"Never hold fewer than 10 stocks covering five different field of business."
-"More fortunes are made by sitting on securities for years at a time than by active trading."
-"Reappraise every holding at least every six months."
-"Be quick to take losses, reluctant to take profits."
-"Avoid inside information as you would the plague."
-"Diligently seek facts; advice, never."
-"Keep at least half [your investment portfolio] in income-producing securities." (This would include not only bonds, but also dividend-paying stocks.)
-"Never put more than 25 percent of [your investment portfolio] into securities about which detailed information is not readily and regularly available." (We'd suggest that you avoid these securities entirely.)
Other lessons can be gleaned from Carret's life. It wasn't one spent with eyes glued to the stock ticker. He made time for things he enjoyed, such as solar eclipses, which he would travel virtually anywhere to observe. He was generous with and loyal to friends. When he prepared his housekeeper's tax return for her, he quietly paid the taxes due, as well. He was a man of principle. Years ago, when a social club at Harvard agreed to accept him on the condition that he "lose his Jewish roommate," Carret told the club to take a hike.