Through the course of my journey of learning about personal finance, investing and the economy, I have established several tenets as my personal investment philosophy. These tenets usually come about through epiphanies that are triggered by experience. They can be thought of as a culmination or summary of what I've learned since "Starting at 22". Blog posts that I write will most likely be biased toward these tenets, and so they are stated here. I'm sure I'll have more to add as time goes on. In addition, I reserve the right to remove or change tenets to reflect changes in my beliefs and practices.
You learn much more effectively about finance and investing if you "have skin in the game".
While it's true that a lot of websites recommend that beginner investors "trade on paper" without any real money for the first few months / years, I believe that if you put enough research into what you are considering, the best way to learn about investments is to put your money where your mouth is (in the market). If you make a statement about the future of some investment, the satisfaction of being right and the pain of being wrong makes lessons hit home much harder. It's also the best way to get a feel for what you like, and to get comfortable with the state of being invested in something.
There is nothing wrong with holding some cash.
I don't feel the need to have every single cent invested all the time. While it's true that cash is idle as an investment and will actually lose value over the long term due to inflation, there's nothing wrong with having some cash on hand in case a good opportunity comes up to buy a new position or add to an existing position. You never know when a major event happens that will offer up a great stock at a reduced price. If you don't have any cash, you can't take advantage of the opportunity.
Always draw your own conclusions.
Do not act on anyone's advice or anything you hear without independently verifying the information. Always do your own research and draw your own conclusions before making any investment decision.
Invest within your circle of competence, always do your research, have an edge where possible.
This is my newest tenet. I used to have a goal of implementing a "dividend growth investing" strategy, in which you pick the highest-yielding dividend-paying blue chip stocks, and let the money roll in. This strategy is often touted hand-in-hand with the importance of diversification. Of late, I am becoming more and more convinced that the best way to beat the market and attain high investment returns is to invest in what you know. Instead of not putting your eggs all in one basket, spend time finding that one titanium basket, put your eggs in it, and be comfortable with the knowledge that your eggs are safe. In addition, if you know something that very few others in the market don't know (in other words, you have an edge), you are even more likely to be successful. Spend time to understand why a stock is under- or over-valued, and understand why that will change. Many of these statements are congruous with value investing principles. For this reason, you will most likely see more value-investing-oriented blog posts from me in the future.
