We covered the first timeless investment principles for a smart investor here. The first timeless principle for investing is: Always Invest with a Margin of Safety.

Today is the day to learn about the second investing principle that has been taught by Benjamin Graham, the father of security analysis and value investing. This can help you buy stocks and mutual funds regularly without waiting to time the market.

Principle No.2: Expect Volatility and Profit from It: Investing in stocks means dealing with volatility and fluctuating prices. Instead of running for the exits during times of market stress, the smart investor greets downturns as chances to find great investments.

Graham illustrated this with the analogy of "Mr. Market", the imaginary business partner of each and every investor. Mr. Market offers investors a daily price quote at which he would either buy an investor out or sell his share of the business.

Sometimes, he will be excited about the prospects for the business and quote a high price. At other times, he is depressed about the business's prospects and will quote a low price.

So what are the action points to use the above principle of profiting from the volatility. They are:

1. Use the power of Rupee Cost Averaging
2. Use Asset Allocation strategies

The investing principles for those who want to get started was covered before here: links: Get started on Investingor The basics principles of Investing or What is an Investment.

Stay tuned for the third investing principle.

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