Why Setting 'Simple Rules' Can Make You a Better Investor

Establishing simple guidelines or rules takes the emotion out of investing and that loss of emotional control is a big reason why people lose money in the market, said Kathleen Eisenhardt, author of 'Simple Rules.' Eisenhardt added that investors also need to make sure that those simple rules work for them. Buying when there is 'blood in the streets' may work for Warren Buffett, yet it may not be the best approach for you. She said the easiest rules concern buying stocks, while setting rules to sell stocks is much more difficult. Finally, Eisenhardt said companies throw out the rule book when the old way is not working anymore and investors should do the same.