This week’s theme is the immutable principles of successful investing. Successful investing for the long-term requires discipline and sticking to a set of unchanging principles, and today’s immutable, unchanging principle is don’t overpay.

One of my favorite, timeless books on investing is The Most Important Thing: Uncommon Sense for the Thoughtful Investor, by Howard Marks.

If you’re interested in becoming a better investor, it’s a must-read. I’ll link to the book in the show notes for this episode, which you can find it over on iTunes by searching for the One Minute Retirement Tip, Episode #95 - Don’t Overpay.

Buy the book on Amazon

In his book, Howard Marks points out: “No asset is so good that it can’t become a bad investment if bought at too high a price.” In other words, don’t overpay.

He goes on to say:

• In the short run, investing is more like a popularity contest.
• The most dangerous time to buy an investment is at the peak of its popularity. At that time, all the positive data and assumptions are reflected in the price. Everyone that is going to buy has already bought.
• The optimal time to buy an investment is when no one else wants it. At that point, all the negative data and assumptions are reflected in the price. Everyone that is going to sell has already sold.
• Buying at a price below the real worth of an investment is the most reliable approach to make an investment profit.

This principle is applicable to individual stocks, but also to other investments, like mutual funds, ETFs, and especially, the stock market as a whole.

The time to add to stocks is when no one wants to own stocks. That’s the exact opposite of what most investors do. They get in and out of the stock market at precisely the wrong times, and it has a devastating impact on their long-term returns and their ability to reach their goals in retirement. So have the courage to run in the opposite direction of everyone else, and always remember: Don’t overpay.

That’s it for today. Before you go, please leave a review and comment in Alexa or iTunes. Your feedback means a lot to me. And if there’s a retirement topic you want me to cover, let me know in your comments as well.

Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip.

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