The Oxford Club is a network of investors and entrepreneurs around the world who share their wealth of knowledge for the benefit of all members. They’re based in Baltimore Maryland, and produce a lot of information to help members become more successful in business and life, and especially in their investments.
Recently the Club published an article expressing the four foundations of their investing advice. It goes far beyond mere tips or speculation on specific companies that will be soon out of date. Instead, this article contains information all investors can use to improve their results now and for the rest of their lives. That includes the youngest investors just getting started as well as the most experienced. Even many people who consider themselves smart and sophisticated make mistakes in these areas.
The first principle is to diversify. Unfortunately, many investors believe diversification means buying all the high tech companies instead of just one. However, true diversification requires much more depth. It requires investors to spread their investments out among many asset classes, not just buy only stocks.
William Bonner, the founder of The Agora, started the Oxford Club.
Diversification also requires people buy different kinds of the same asset classes. Stocks are great to own, but people should buy both large and small companies. Some kinds of economic conditions and markets favor large cap stocks. Some kinds of economic conditions and markets favor small cap stocks. You should have large, established blue chip companies and some small companies that are likely to grow into the large blue chip successes of the future. And invest in many sectors, not just tech stocks. And buy the stocks of companies in other parts of the world outside the United States. The biggest growth of the future could easily come from emerging markets in Asia, Africa or South America.