John T. Reed’s rules of investment

Reed’s rules of investment
1. No one can predict future asset values.
2. If it sounds too good to be true, it is not true.
3. Minimize or eliminate transaction fees.
4. Minimize or eliminate gains taxes.
5. Minimize or eliminate income taxes.
6. You should own multiple uncorrelated assets.
7. Some of your assets should be hedges against inflation, like real estate, coins, foreign currency, forever stamps, inventory, raw materials.
8. Some of your assets should be hedges against deflation like coins, preferably coins with high-melt-value-to-face-value ratios so they also protect against inflation.
9. Borrow a mortgage against your principal residence from a reputable mortgage lender.
10. Start investing as early as possible in your life.
11. Sell only to make a purchase or pay bills or when the asset is heading for disaster.
12. Do not own bonds.
13. Make sure your foreign currency bank accounts are fully covered by deposit insurance when that is available in the country in question.
14. Do not attempt to time the stock, bond or commodity market.
15. Past performance is not indicative of future performance.
16. Have enough liquid assets, insurance, and credit to be able to pay routine bills and rainy day expenses.
17. Minimize casualty risk by insuring assets like real estate, inventory, vehicles and equipment and by making cost-effective mitigations to the insurer’s risks.
18. Minimize credit risk, that is, the risk that someone who owes you money will not pay it back.
19. Minimize litigation risk, that is the risk that you will get sued.
20. Minimize toxic contamination risk, that is the risk that you buy a property the soil of which contains toxic material.
21. Minimize political risk, that is the risk that pertinent municipal, county, state, or federal enact laws that reduce the value of your assets.
22. Minimize interest rate risk, that is, the risk that you will be hurt by rising interest rates.
23. Minimize management risk, that is the risk that a person managing your assets is incompetent.

24. Minimize fidelity risk, that is the risk that your employees and/or independent contractors are stealing from you.
25. Your heirs should ask you to, and help you to minimize inheritance tax and transaction costs.
26. Past performance is not predictive of future performance. This statement is in every prospectus. It may be the only thing in prospectuses that is worth reading. Believe it. It is a variation on number 1 above. That is about supposed supermen of stock picking. This is about super data that says how to pick stocks. Neither is true.