Home CryptoBitcoin Investing: Prudent Man Rule

#capital #investing #investor #prudent #prudenc #buy #sell #stocks #crypto

“The prudent man rule is an investing principle that is used by a person seeking reasonable income and preservation of capital”–Paul Ebeling

The Prudent Man and Prudent Investor are the concept of investing trust assets and have shaped investment trends going back to Y 1830.

The rule is intended as a guideline for investors or someone managing assets of value for another person or people. Overall, the law does not require a person with a fiduciary responsibility to have extraordinary expertise. However, the prudent-person rule sets a reasonable expectation that the person will make rational, intelligent decisions when making investment choices on behalf of a client, or him/herself.

No hard and fast rules are possible. Generally speaking, the funds may not be invested entirely in high-risk investments. The assets may not be diverted to investments that would enrich a money manager or a 3rd party.

This rule does not require that all the investments made must be lucrative or consistently generate outsized profits. However, if a fiduciary were given control of an estate during a period that its owner was unavailable, the rule would prohibit the fiduciary from putting all the funds into money-losing endeavors.

The investment decisions must be made according to what a person of average intelligence would deem as appropriate. So, fiduciaries must act prudently and must diversify the plan’s investments in order to minimize the risk of large losses. And avoid conflicts of interest.

My personal use of this rule for since I learned it in Y 1981 is to only take profit money off of the table + if the investment 2Xs, sell 50% and ride with the rest. It takes discipline.

Have a prosperous week, Keep the Faith!

You may also like


Your Trusted Source for Capital Markets & Related News

© 2024 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.