Bernard Baruch’s 10 Rules of Investing

Bernard Baruch (1870–1965) was the son of a South Carolina physician whose family moved to New York City when he was eleven year old. By his mid-twenties, he is able to buy an $18,000 seat on the exchange with his winnings and commissions from being a broker. By age 30, he is a millionaire and is known all over The Street as “The Lone Wolf”.

Bernard Baruch's 10 Rules of Investing Born in Camden, South Carolina, and raised in New York City, Bernard Mannes Baruch graduated from the City College of New York in 1889. His original job on Wall Street, at the brokerage firm of A. A. Housman & Co., paid $3 a week, but he became a millionaire by the time he was thirty. He was a director of the New York Stock Exchange, a front-runner in mining finance, and an irregular investor in properties ran by the Guggenheim household. Even though he did not sell out just before the stock market crash of 1929, as fable has it, he did recover the bulk of his fortune.

In his two-volume 1957 memoirs, My Own Story and The Public Years, Baruch left us with the following timeless rules for investing

Being so skeptical about the usefulness of advice, I have been reluctant to lay down any ‘rules’ or guidelines on how to invest or speculate wisely. Still, there are a number of things I have learned from my own experience which might be worth listing for those who are able to muster the necessary self-discipline.

  • Don’t speculate unless you can make it a full-time job.
  • Beware of barbers, beauticians, waiters—of anyone—bringing gifts of “inside” information or “tips.”
  • Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.
  • 'Baruch My Own Story' by Bernard Baruch (ISBN 1607969130) Don’t try to buy at the bottom and sell at the top. This can’t be done—except by liars.
  • Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.
  • Don’t buy too many different securities. Better have only a few investments which can be watched.
  • Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
  • Study your tax position to know when you can sell to greatest advantage.
  • Always keep a good part of your capital in a cash reserve. Never invest all your funds.
  • Don’t try to be a jack of all investments. Stick to the field you know best.

Baruch would afterwards continue from Wall Street to Washington DC as an consultant to both Woodrow Wilson and to Franklin D. Roosevelt during World War II.

Later on, he became identified as the Park Bench Statesman, due to his keenness for debating policy and politics with his associates in the open air.

He lived until a few days before his 95th birthday in 1965. You could do worse than to invest and live based on these facts.

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