February 2015: 3 Most Important Rules of Investing

Jason Burack of Wall St for Main St did a short video on what he thinks are the 3 Most Important Rules for Investors. Here's his list: The 3 Most Important Rules for Investing: 1. Politicians and governments can and will change the rules anytime they want perhaps on a daily basis 2. Because of rule #1 people should not go "all in" on investing in any one asset class or investing in only one country or company 3. People should focus on creating as many possible income streams as they can from owning different investments and businesses to protect themselves to survive and thrive whatever is coming in the future thanks to the myopic stupidity and rent seeking behavior of parasitical central planners, politicians, bankers, government bureaucrats, etc

Comments

1. I would perhaps put a caveat on "as many possible income streams". Warren Buffet has been said to prefer holding 10-12 stocks. Ben Graham suggests 10-30, Burton Malkiel, 15-20. Rick Rule sets the limit as "as many as you can afford to spend an hour a month on". I suppose if you do this full time you could hold over 150 instruments. Of course, markets are now more correlated than ever, I remember seeing a study that showed that the level of diversification that was reached in the past with 20 stocks required about 60 in modern markets. We should not limit this thinking to only stocks either, but consider all 'positions'. Stocks, ETFs, Futures, options, spreads, bonds, etc, even cash are all positions. The message is that there is a point where taking more another position is more trouble than it's worth. I suppose that 30 positions is probably very adequate and anything over 60 probably overkill. I'd be curious to hear your thoughts on this.
2. The Golden rule is he who owns the Gold makes the rules !
3. If Rule #1 is true, what countries do you put precious metals in for example,  if the politicians, change the rules tomorrow?