The smartest advice I ever got

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I worked at the bank in Wauwatosa, Wisconsin, where I grew up, shortly after I got out of the Navy in 1958. The president of the bank, Art Kohaske, used to say, "Know your borrower." Mr. Kohaske drilled that into me: You had to know the people, know the business. And I admired him greatly.

I translated that lesson into "Know your issuer." In other words - to put it in CFA talk - know the specific risk that you're taking with a particular investment. You can apply that advice to government agencies, munis, corporate bonds, stocks - it applies big-time to stocks. That is really very, very good advice. If you really know your companies, really know them, you have a phenomenal advantage, particularly in markets like this where you get rapid movements up and down that aren't related to individual companies.

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