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Stock Investing--25 Pearls of Wisdom for the Individual Inve |
Here are 25 Sensible Stock Investing rules
for individual stock investors.
1. Remember Buffett
Rule #1: Don't lose money. Maintain a fiduciary duty to yourself.
2. Pick only excellent companies to invest in. Avoid the ones with
major flaws.
3. Determine a rational value for any stock
you are considering. Always try to buy at an advantageous price.
4. Learn the difference between investable trends and noise in the
market.
5. Don't get stuck in one way of thinking. In
investing, as in life, seek balance.
6. Remember that a 50%
loss followed by a 100% gain equals zero. How likely is that 100%
gain? If it is improbable, avoid the 50% loss in the first place.
7. Manage your portfolio intelligently. Investing is not a ?set it
and forget it activity.
8. Any investment in the stock
market carries risk. Learn how to manage it.
9. Do
everything you can to stack the odds in your favor.
10.
Read, analyze, and do your own thinking. Always keep learning.
11. If you are interested in a company, write out its story in
a few sentences. If you can't understand it enough to do that, don't
invest in it.
12. The tortoise usually beats the hare over
the long haul.
13. Stocks don't all go up and down
together. Find the ones that are going up.
14. Over the
long term, stock prices follow corporate earnings. Look for
companies with good prospects for sustained earnings growth.
15. The market is rational over the long term and rewards sensible
investing.
16. Invest in dominant companies. They will be
able to sustain earnings growth.
17. Don't trust management
which has demonstrated lack of integrity.
18. Investing
should be fun. Don't put your money into companies who make or do
anything you don't admire.
19. Beware of companies with
lots of debt. It's as hard for them to handle as it is for you.
20. Like maybe love dividends.
21. Run your investments
like a business: My Investment Company.
22. Come at
investment decisions from several angles for the best results.
23. As in poker, the best investors gain the most with their good
hands (stocks) and lose the least with their bad ones.
24.
Know your goals and construct strategies to reach them.
25.
Don't be afraid to have some of your ?stock money in cash.
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