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The Intelligent Investor

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Steve Pomeranz, CFP

The Intelligent Investor

I’ve been rereading the Intelligent Investor Revised Edition” by Benjamin Graham, again; maybe this is the tenth time I’ve read it.  I read it every so often so I keep my investing head screwed on straight.  In this particular version of the book, has commentaries after every chapter by Jason Zweig and as I was reading it I came along what is titled:

“The Investment Owners Contract.”

I     [insert name]     hereby state that I am an investor who is seeking to accumulate wealth for many years into the future.

I know that there will be many times when I will be tempted to invest in stocks or bonds because they have gone (ore “are going”) up in price, and other times when I will be tempted to sell my investments because they have  gone (or “are going”) down.

I hereby declare my refusal to let a herd of strangers make my financial decisions for me.

I further make a solemn commitment never to invest because the stock market has gone up, and never to sell because it has gone down.  Instead, I will invest $___________.00 per month, every month, through an automatic investment plan or “dollar-cost averaging program,” into the following mutual fund(s) or diversified portfolio(s):

__________________________

__________________________

__________________________

I will also invest additional amounts whenever I can afford to spare the cash (and can afford to lose it in the short run).

I hereby declare that I will hold each of these investments continually through at least the following date (which must be a minimum of 10 years after the date of this contract):  ____________________ ____, 20__.

The only exceptions allowed under the terms of this contract are a sudden, pressing need for cash, like a health-care emergency or the loss of my job, or a planned expenditure like a housing down payment or a tuition bill.

I am, by signing below, stating my intention not only to abide by the terms of this contract, but to re-read this document whenever I am tempted to sell any of my investments.

This contract is valid only when signed by at least one witness, and must be kept in a safe place that is easily accessible for future reference.

 

 

Signed:                                                      Date:

 

_____________________                        _________________  ___, 20___

Witnesses:

 

_______________________  ____________________

_______________________  ____________________

 

 

This is a terrific document to keep you on track to the road to investment wealth. It is so much a part of our human nature to jump on board in rising markets; and to bail out and run for the hills when the market is falling. This contract can help you remember to keep your investments diversified so nothing will cause your portfolio to “go out of business”.  And it reminds us that our money will fluctuate with the economy but by dollar cost averaging, we will buy in good and bear markets.

You can find this contract in the book: “The Intelligent Investor: Revised Edition” by Benjamin Graham. Updated Commentary by Jason Zweig

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.