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Important Investing Lessons I’ve Learned in 50 Years

I’ve learned a lot of important investing lessons in my 50 years in the business. Here are three of the most essential lessons.

I would like to share with you some important investing lessons I’ve learned during the past 50 years. I’ve held various positions in the investment world, but the best part of every job has always been the research, which has provided me with the challenge to gauge my skills and stock-picking ability against other stock pickers and the stock market indexes.

Investing Lesson #1: Diversify

In my 50 years of investing, I have learned that a well-diversified portfolio will produce superior returns over the long haul (five years or more). Ned Davis, head honcho at Ned Davis Research, conducted an extensive study to determine which diversification strategies produced the best results. His findings surprised many investors.

First and foremost, Ned Davis Research found that the old method of holding a broad array of stocks doesn’t work anymore. Searching for growth stocks, value stocks, dividend stocks or international stocks using basically the same methodology doesn’t produce dependable results. The best strategy, according to Ned Davis’s study, is to use different research methodologies (as many as is practical) to find stocks for your portfolio.


During the past 15 years as Chief Analyst of the Cabot Benjamin Graham Value Investor, I have consistently used seven different methods to find undervalued stocks. Some of the criteria I use include low book value, consistent dividend increases, low PEG ratios, high return on equity, strong balance sheets and many more. Most investors, though, don’t have the time to create several different methodologies and update the data on a daily or weekly basis.

My Tip: I have a suggestion that might be the solution for you. Purchase several investment newsletters from analysts who have produced excellent stock market results using different approaches. My opinion might be biased, but I truly believe Cabot Wealth Network boasts the best analysts in the business. President Tim Lutts has assembled nine analysts with differing views on how to find the best stocks in which you can invest. The tried-and-true strategies used by these analysts produce an ideal array of stock recommendations to help you diversify your portfolio. Go to our newly renovated website at to find the advisories that will get you on your way to become the best investor you can be.

Investing Lesson #2: Be Patient

I have a few other words of wisdom for you that I believe will help you become a better investor. Be patient. Last year, I read about two college professors in California who conducted a comprehensive study to find common mistakes that investors make. After studying 50,000 brokerage accounts, the professors concluded that investors tend to pick the right stocks, but they consistently sell too soon.

The study on 50,000 accounts revealed that investors who sold a stock and replaced it with another stock within 30 days and held their new stock for one year, would have fared better if they had held their original stock rather that selling. The conclusion: two-thirds of investors lose patience and sell way too soon!

Investing Lesson #3: Create an Investment Plan

My third investing lesson for you today is to create and maintain an investment plan for you and your family and stay with it. Your plan should be on paper or on your computer—not in your head. Your investment plan should include your short- and long-term goals as well as your buy and sell strategies.

You should review your plan monthly or quarterly and refine it based on your investing results. No plan will produce good results all the time, but stick with it—you’ll be glad you did!

Later this week, I will reveal my stock pick for the next 50 years. Stay tuned.

Until next time, be kind and friendly to everyone you meet.


J. Royden Ward has spent his entire career seeking strong investment returns for his clients while keeping risk low. In 1969, he developed a computerized model of stock selection based on formulas created by investment legend—and Warren Buffett mentor—Benjamin Graham, and since 2003, he’s been spreading his wisdom far and wide as chief analyst of Cabot Benjamin Graham Value Investor.