10 Investment Guidelines: Part 2

As we learned from the housing bust, though, that is easier said than done. Too many people bought houses beyond their means, giving them the illusion of wealth, only to find out they are worse off now than when they started.

In the investment world, one only has to look as far as long-term capital management, which relied on nearly infinite leverage before having to be rescued by a consortium of banks. That is another great bit of financial history that one must know. You can read more about it in Roger Lowenstein's excellent book When Genius Failed . (Note: I am an unnamed participant -- one of the good guys -- in that book.)

>To order reprints of this article, click here: Reprints