Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

27 of 40
BACK NEXT
Know what risk you are taking
Dan Fuss
Manager, Loomis Sayles Bond fund

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.

NEXT: Performance is random

Last updated July 22 2008: 11:27 AM ET
More Galleries
6 ways to change the world for as little as $20 These platforms help make impact investing accessible to anyone with $20 to spare. More
5 great day trips from Sydney Standout escapes just a short journey from Australia's largest city. More
New cameras go weird, wearable - even old school Meet the new crop of digital cameras, an eclectic group each with a very particular set of skills. More

Special Offer