Nuggets for financial wisdom (II)

4. There are more fools among buyers than sellers: This old French proverb is based on a simple imbalance of knowledge. The trading of money and goods may seem simple, but the seller of the goods usually knows pretty much all there is to know about the object or asset he is parting with. The buyer usually knows less.

Anyone who's ever sold a car or house (or a with-profits endowment policy for that matter) knows it's relatively easy to conceal a fault from the average buyer. But money, at least outside hyperinflationary economies like Zimbabwe, is of a known and certain worth.

Of course, there are exceptions. Those who sell profitable shares too soon, only to see the price race away, can certainly be called foolish. Yet there are probably fewer of them than those who bought a share just before a profit warning.

5. The best time to plant a tree is 20 years ago...the second best time is now: A twig or sapling never looks very impressive in its first year or two and neither do most investments or savings accounts. However, look at a tree after 20 years and it's already impressive. If you don't plant your acorns now, you're never going to get that mighty oak.

6. Hollow vessels make the greatest sound: The contrarian investor will recognise this one. It brings to mind the much hyped revolutionary products that fail to turn a profit, the fanfared stock market debuts that turn to disaster, and the companies with sky-high price earnings ratios which are never off the news pages, but never make a dime. Which, then, are the real investment success stories? The unsung and often unloved companies in dull businesses.

Take a classic case: Associated British Ports was privatised on Valentine's Day 1983. Margaret Thatcher thought it a strike-ridden industrial backwater compared to supposedly exciting companies like British Airways. So ABP was almost given away. Yet by the time ABP was taken over in 2006, it had returned (with dividends reinvested) more than £100 for every £1 invested by buyers.

BA, by contrast, has returned about £3 for every one over a similar period - and that's without mentioning the Terminal 5 luggage disaster.

7. A rising tide buoys all boats: In strong stock markets even bad shares rise, while in weak ones, even the best may weaken. In short, you can't tell the good from the bad when the market is in an extreme mood. As legendary investor Warren Buffett said: "Price is what you pay, value is what you get."

8. If no-one ever took risks, Michelangelo would have painted the Sistine floor: Neil Simon's witticism has many applications. However, the Byzantine complexity and risk structure of the credit markets look unlikely to have anything like the longevity of the renaissance masterpiece. So, don't look around 100 years from now for any monuments to the banking creativity we've seen in the last year or two.