Almost a year ago, Gorday Murray, a former bond salesman for Goldman Sachs, passed away from complications resulting from brain cancer. Before he died, he was able to write down his thoughts and ideas on his top five investment guidelines. They crystallize his decades of experience on Wall Street and will be applicable for decades to come:
Five investment guidelines
1. Use ONLY fee-only financial advisors
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2. Divide your assets into three groups:
- Stocks and bonds
- Large and small companies
- Value and growth
3. Once you’ve picked out your advisor, discuss your asset allocation
You’ll need to allocate your assets between varying asset classes: foreign and domestic, equity and debt instruments, real estate and commodities.
4. Decide if you want to be an active or more of a passive investor
Passive investors do better. Read my review of How a Second Grader Beats Wall Street for more details along those lines. In the book, author Alan Roth details with number after number where investors who constantly tinker with their portfolio get it wrong and do FAR WORSE than the market.
5. Rebalance often
Regularly review your investments and do the unthinkable: shave the profits from your winners and buy more of your losers. This is where you absolutely NEED the unemotional advice and counsel of a financial advisor. Rebalancing forces you to do what the most successful investors do: Buy Low and Sell High!
Great financial advice is timeless
After spending his life pushing bonds on mutual fund managers, Murray eventually went to work for Dimensional Fund Advisors, a mutual fund company that speaks out against actively managed investments in favor of passively managed portfolios.
Gordon Murray and Daniel Goldie thankfully were able to finish the book before Murray passed away in January of 2011.