The last 18 months have tested the mettle of every investor. This is an opportune time to consider new investment resolutions for 2010, says Jonathan J. Hirtle, CEO of Pennsylvania-headquartered Hirtle, Callaghan & Co., one of the largest privately held investment firms in the United States.

He offers the following investment resolutions for individual and institutional investors alike:

1) I will remember that there is no free lunch. “Stock market investing provides returns that are higher than returns from bonds and cash equivalents, because stocks are almost always more risky than bonds and cash equivalents. Periodically that risk is revealed through dislocation,” Hirtle says. Don’t commit more assets to stocks and stock-like investments, than you can tolerate during the next dislocation.

2) I will always be skeptical – but never cynical. “Doomsday pessimism is just the mirror image of pie-in-the-sky optimism and both are highly unlikely,” says Hirtle. Make prudent investment decisions based on likely, not unlikely, outcomes.

3) I will conduct my own due diligence. Don’t invest because a friend has, or because recent returns have been high. If you can’t understand the investment process, don’t invest, Hirtle advises.

4) I will stay diversified. No matter how compelling an investment or an investment strategy sounds, only believe a little bit. “Wealth is created and lost through concentration,” Hirtle says. Don’t concentrate in an investment you don’t understand.

5) I will think of risk in total. Be sure to consider operating risk and financial risk, as well as investment risk. “Only families and organizations with strong, reliable cash flows and low debt levels can afford to pursue extraordinary returns through a risky investment strategy,” Hirtle says.

6) I will value my investment portfolio infrequently. “Daily pricing has to do with supply and demand — not value,” Hirtle says. He advises investors to value an investment portfolio monthly at most. “Quarterly is better,” he says.

7) I will always care about price. “There is no asset that is attractive at any price and there is almost no asset that is not attractive at some price,” says Hirtle.

8) I will never forget the difference between investing and speculating. “Equating investing with speculating is like equating work with gambling. Speculating is not investing. Trading is not investing. Investing is investing. It is solely about acquiring future cash flows at an attractive price — period,” Hirtle concludes.

With US$20 billion under direct supervision, Hirtle Callaghan’s clients include individuals, family groups, endowments, foundations and pension funds. The firm has offices in Philadelphia, Atlanta, Boston, Chicago, New York, Phoenix and Pittsburgh.

IE