Video Lecture: Aswath Damodaran, "Valuation: Four Lessons to Take Away"

The Black Swan "barbell" investing strategy by Nassim Nicholas Taleb makes risk-free cash king.

Treasury Bills 85% to 90%

Options or other highly speculative investments 10% to 15%

Jason Zweig's Three Commandments of Investing

The First Commandment: Thou shalt take no risk that thou needst not take.
Always ask yourself: Is this risk necessary? Are there safer alternatives that can accomplish the same objective? Have I studied the pros and cons of each before settling on this choice as the single best way to achieve my goal? Unless you ask, do not invest.  

The Second Commandment:
Thou shalt take no risk that is not most certain to reward thee for taking it. Always ask yourself: How do I know this risk will be rewarded? “Most certain to reward thee” does not mean that there is zero chance that you will not be rewarded. It does mean, and must mean, that you are highly likely to be rewarded. What is the historical evidence, based on the real experience of other investors, to suggest that this approach will actually succeed? During the periods in the past when it hasn’t worked – and every investment in history has gone through such dry spells, regardless of what the hypesters might tell you – how big were the losses? Unless you ask, do not invest.

 The Third Commandment:
Thou shalt put no money at risk that thou canst not afford to lose. Always ask yourself: Can I stand to lose 100 percent of this money? Have I analyzed not merely how much I will gain if I am right, but how much I can lose and how I will overcome those losses if I turn out to be wrong? Will my other assets and income be sufficient to sustain me if this investment wipes me out? If I lose every penny I put into this idea, can I recover from the damage? Unless you ask, do not invest.

Source:
Zweig, Jason. The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself. Hoboken, NJ: Wiley, 2010. Print.

Model Portfolio for Professional Athletes

Securites            50% - 65%

Alternatives        15% - 20%

Real Estate           7% - 12%

Private Equity      5%

From ESPN 30 for 30: Broke

Pat Dorsey’s The Five Rules for Successful Stock Investing

Do your homework.

Find economic moats.

Have a margin of safety.

Hold for the long haul.

Know when to sell.

 

Bill Ruane’s Rules for investing as adapted from his “Memorandom of Investment Philosophy” by Louis Lowenstein in his working paper number 290.

a.     Buy good businesses.

                                                              i.      The single most important indicator is a superior return on capital, because it means the company enjoys a unique proprietary position.

b.     Buy businesses with pricing flexibility.

                                                              i.      Always true but particularly in the inflationary period in which he wrote.

c.      Buy stocks at modest prices.

                                                              i.      While price risk cannot be eliminated, it can be lessened materially by avoiding high multiples.

d.     Buy strong balance sheets.

                                                              i.      If this rule is violated, none of the others will matter.

e.     Buy cash generating businesses.

                                                              i.      Those businesses where the earnings are truly available to create future growth or for payment to stockholders.