#11 – Sam Stovall – Sam’s Seven Rules of Wall Street: Crash-Tested Investment Strategies That Beat the Market

41 minutes

Episode 11 features the always-fun Sam Stovall. Sam starts by making an unlikely connection between Clint Eastwood and investing – “A man’s got to know his limits.” Being aware of his own limits, Sam put together a list of rules to help him win at the game of investing. He and Meb dive in, starting with “Let your winners ride, cut your losers short.” Easier said than done, as most of us tend to hold onto our losers, hoping they’ll come back, while selling the winners (prematurely) to lock in gains. “As January goes, so goes the year” is Rule #2. Sam compares investors to dieters looking for a fresh start every year. Rule #3 is a tweak on “Sell in May then go away.” It turns out that’s almost right, but not quite. The better strategy is “rotate rather than retreat.” Do you know the two sectors which historically will boost your returns if you’ll rotate into them during the summer months? Sam will tell you. Rule #4 challenges the idea that there’s no free lunch on Wall Street. According to Sam, there is. If you construct your portfolio in the right way, you can increase your returns without a commensurate increase in risk. “Don’t get mad, get even” is Sam’s fifth rule. Too many investors are losing money because their portfolios are overweight in a few bad picks. So don’t get mad, “get even.” In other words, look to shift your weightings to correct the imbalance. Rule #6? “Don’t fight the Fed, at least, for too long.” For all you bears over the last few years, this seems especially appropriate. Finally, #7 is Meb’s favorite: “There’s always a bull market someplace.” It turns out Sam and Meb share a fondness for rules-based investing. Sam has his own rules which help him identify these bull markets that are always happening someplace. What are they? Find out in Episode #11.

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