Thursday, February 21, 2008
some basic rules for investing
So given the nature of the current market perhaps its time to re-chunk our focus . I am going to offer up some basic rules for investing:
1) Forget the lazy mans Buy and Hold , as Jim Crammer always says do your home work ! For every stock you own you have to know the reason you’re buying it and know the reason for selling it another words; Before you buy it you have to know when you’re going to sell. Some stocks are investments and some stocks are trades and some stocks can be both at different times. Do your home work! Again I refer to Jim Crammer who says for every stock you own it takes one hour a week of research every week! If you can’t do the time then hire a financial advisor like my self.
2) Forget the woulda, shoulda , coulda ,you only make money in the future not in the past ! Analyze your trades good or bad, try to learn something and get back on the horse. Don’t beat your self up and always keep in mind that the past is no indication of the present.
3) Forget “Hot Tips” ,tips are for waiters ,if its really a tip its called insider trading and your cell mate bubba is gonna make you his ,well you know what I mean .
4) And finally don’t put all your eggs in one basket, but beware of all the Wall Street diversification talk, know as “the talk”. In Bear markets 90% of all stocks go down and in Bull markets 80% of all stocks go up, so don’t take too much confidence in this non correlated asset class non sense of over diversifying yourself out of a return. Most Wall Street firms are pushing the fund manager full employment act. So to sit with gold stocks for 10 years before they ever move is a waste of money. If you want to truly diversify true non correlated assets are like cash, commodities, real-estate, small businesses, equities and bonds not different growth stocks in different markets.
James J Foytlin