Julian Klymochko has over 15 years of experience managing hedge funds. Five years ago, he created a list of “easy investing rules of thumb,” representing the key lessons he’s learned throughout his career. He hopes these insights will be helpful to others.
Some easy investing rules of thumb:
- Never go long on a SPAC (except for arbitrage). SPACs have a history of poor post-deal performance.
- Avoid going long on a merger deal that has a buy-side vote.
- Never buy at new lows and never sell or short at new highs.
- Don’t short a story stock unless both the story and the chart have broken.
- Never get emotional about a stock—stay objective.
- Avoid buying preferred shares, unless it’s for arbitrage or liquidation.
- Liquidations always take twice as long and yield less than expected.
- Don’t sell a stock just to “take profits.” Why bench your best player?
- Never buy a stock based on a sell-side recommendation.
- The more complex the DCF, the worse the returns tend to be.
- Keep each short position under 2%. Life’s too short to be constantly stressed.
- No one knows anything. Even the best are often wrong.
- Do your own research! No one else will make money for you—they’ll only make money off you.
- Constantly evolve. There’s no such thing as “style drift”—only progression.
- Do it for the love of the game, nothing else.
- If a stock you own is in a bidding war, never sell. You’re the beneficiary of the “auction winner’s curse.”
- The stock market is not the economy. Don’t confuse the two.
- Never buy a contingent value right (CVR), and if you’re issued one, sell it.
- Never use leverage for cryptocurrency investments. They’re risky enough without it.
Of course, there are investors who do the exact opposite and still succeed. The key is to build your own system, own it, and execute it.
