The Eight Commandments
Only insiders are aware of the eight commandments of investment, the investment principles of Erwin Heri, published in book form twenty years ago by Helbing Lichtenhahn Verlag in Basel.
Erwin Heri is a professor of economics and a book author. He describes himself as a hybrid because he works as an academic and as a practitioner. For example, the 64-year-old was Chief Financial Officer at Credit Suisse Financial in Zurich. In his younger years – and this impresses me even more – Heri was a member of the Swiss national table tennis team and represented Switzerland at world championships.
Heri is a stock fan. That’s a good thing. If a stock market miracle doesn’t happen on Monday, the most important indices will close the year in the red. The Swiss Market Index (SMI), for example, will lose over twelve percent this year. Certainly not the worst opportunity to deal with equity investments. Always provided that Heri’s bids are not violated. Here they are:
- Invest: Stock abstainers must be content with meager returns. The savings book doesn’t work.
- Don’t seek short-term profits: High yields in a hurry entail high risks. Fruits also ripen only slowly.
- Don’t try to catch the right moment – it doesn’t exist: even professionals fail to buy at the lowest point and sell at the highest. The solution is to invest in stages.
- Don’t try to find the right title – it doesn’t exist. There are plenty of examples where, contrary to all forecasts, a share price went in the wrong direction. The magic word is geographical spread.
- Do not try to know more than the “market”, because the “market” knows a lot. Countless others know what you think you know. Insider tips are rarely secret.
- Be disciplined. Define an investment strategy. Don’t be put off by short-term swings. Back and forth empties your pockets.
- Have fun, but – Strategy First. There’s nothing to stop you “stockmarketing” a small portion of your assets. The desire to play should also be satisfied.
- Do not trust anyone. In the financial sector there are numerous charlatans. And the serious financial advisors are not clairvoyants either.