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Buy and Hedge: The 5 Iron Rules for Investing Over the Long Term by Wayne Ferbert, Jay Pestrichelli

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5. Capital Lost Is Capital That Cannot Grow

“Say it! Say it! Say, ‘I lost the nest-egg.’ Go on, say it!

—David Howard (played by Albert Brooks) in Coming to America (1985)

This first Immutable Law of Investing probably seems somewhat trifling at first glance. After all, it is a blinding glimpse of the obvious (BGOTO, pronounced “buh-GO-tuh”). But when you think about it, aren’t all the most powerful laws simple and straight to the point? Thou shalt not steal. Thou shalt not kill. These are short, straightforward, and downright pithy!

In the end, this is the most important law that drives the Buy and Hedge strategy. Hedging is the act of building downside loss protection into a portfolio or position. Hedging protects the investor from potential ...

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