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To invest successfully...
Robert T 10-20-2006, 1:05 AM | Post #185491 | 
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"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."
-Warren Buffet (from preface to the fourth edition of Benjamin Graham's Intelligent Investor).

Sound advice which I found to be very helpful - hope its helpful for others.

Personally, the Fama-French five factor model provides the 'sound intellectual framework' for our investment approach, and in itself has helped keep our emotions in check. In addition, we have tried to ensure that our bond allocation percentage is aligned to our ability to take risk (also helps keep emotions in check). On the latter, Benjamin Graham in the Intelligent Investor offers this advice "We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his [her] funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds." (pg. 89 of fourth edition).

Robert

Originally posted in thread: 53998
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