Stock Investing--25 Pearls of Wisdom for the Individual Investor

The wisdom for successful investing never change.  For individual stock investors who want to invest wisely, here are the top 25 Sensible Stock Investing “rules” that you should pay attention to.

Here are 25 Sensible Stock Investing “rules” for individual stock investors.

--1. Remember Buffett’s 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.

Next Investment Article:
Newton's Laws of Stock Market Trading
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