1. On RISK – If you are not worried, you are not risking enough
–Always play for Meaningful Stakes
–Resist the allure of Diversification
2. Always take your profit TOO SOON
–Don’t FEAR REGRET
–Decide in advance WHAT gain you want and when you get in, GET OUT
3. On HOPE – When the ship STARTS to sink, DON’T PRAY. JUMP.
–1st obstacle: Fear of REGRET
–2nd obstacle: the need to abandon part of an investment
–3rd obstacle: the need to admit you’re WRONG
–Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain
4. On FORECAST – Human behavior cannot be predicted
–Not base on what supposedly WILL happens but REACTS instead to what DOES happen
5. On PATTERNS – The truth is that world of money is a world of patternless disorder, utter chaos
–Beware the Historian’s Trap: It is true that history repeats itself sometimes, but MOST often it doesn’t
–Beware of the Chartist’s Illusion: It is dangerous when it makes the thing represented look more solid and portentous than it really is
–Beware of Correlation and Causality Delusions: guard against imagining causes when you can’t actually observe them at work
–Beware of Gambler’s Fallacy: for it engenders the feeling that one is temporarily invincible.
6. On MOBILITY - Avoid putting down ROOTS. They impeded motion
–Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia. It is a mistake to let yourself get too attached to any physical thing in which your capital is invested
–Never hesitate to abandon a venture if something more attractive comes into view. Ready to jump away from trouble or seize opportunities quickly
7. On INTUITION - A HUNCH can be trusted if it can be EXPLAINED
–Discriminating use: intuition can be useful, the challenge is to discern which are worthy
–Never confuse a hunch with a HOPE. To be highly SKEPTICAL anytime I have a hunch that something I WANT to happen will happen
8. On OPTIMISIM & PESSIMISIM - Never make a move if you are merely optimistic. Seek CONFIDENCE instead.
–The PRO doesn’t have Optimism. What he has is CONFIDENCE - springs from the CONSTRUCTIVE USE of PESSIMISM - and from knowing how you will handle the WORST
9. On CONSENSUS – a MAJORITY, though not always and automatically WRONG, is MORE LIKELY to be WRONG than RIGHT.
10. On STUBBORNESS – Don’t chase an investment in a spirit of stubbornness. Never try to save a bad investment by AVERAGING DOWN.
11. On PLANNING – Long-range plans engender the dangerous belief that the future is under control. Instead of attempting to organize your affairs to accommodate unknowable events in the future, REACT to events as they unfold in the PRESENT. When you see OPPORTUNITIES, GO for them. When you see DANGER, JUMP OUT of the way.