Investment Rules

Rule 1: Bulls, Bears Make Money, Pigs Get Slaughtered

It's essential for all traders to know when to take some off the table. 

Rule 2: It's OK to Pay the Taxes

Stop fearing the tax man and start fearing the loss man because gains can be fleeting. 

Rule 3: Don't Buy All at Once

To maximize your profits, stage your buys, work your orders and try to get the best price over time. 

Rule 4: Buy Damaged Stocks, Not Damaged Companies

There are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies. 

Rule 5: Diversify to Control Risk

If you control the downside and diversify your holdings, the upside will take care of itself.

Rule 6: Do Your Stock Homework

Before you buy any stock, it's important to research all aspects of the company. 

Rule 7: No One Made a Dime by Panicking

There will always be a better time to leave the table, so it is best to avoid the fleeing masses.

Rule 8: Buy Best-of-Breed Companies

Investing in the more expensive stock is invariably worth it because you get piece of mind. 

Rule 9: Defend Some Stocks, Not All

When trading gets tough, pick your favorite stocks and defend only those. 

Rule 10: Bad Buys Won't Become Takeovers

Bad companies never get bids, so it's the good fundamentals you need to focus on. 

Rule 11: Don't Own Too Many Names

It can be constraining, but it's better to have a few positions you know well and like. 

Rule 12: Cash Is for Winners

If you don't like the market or have anything compelling to buy, it's never wrong to go with cash. 

Rule 13: No Woulda, Shoulda, Couldas

This damaging emotion is destructive to the positive mindset needed to make investment decisions.

Rule 14: Expect, Don't Fear Corrections

It is not always clear when a correction will strike, so expect and be prepared for one at all times. 

Rule 15: Don't Forget Bonds

It's important to watch more than stocks, and bonds are stocks' direct competition.

Rule 16: Never Subsidize Losers With Winners

Any trader stuck in this position would do well to sell sinking stocks and wait a day. 

Rule 17: Check Hope at the Door

Hope is emotion, pure and simple, and trading is not a game of emotion.

Rule 18: Be Flexible

Recognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static. 

Rule 19: When the Chiefs Retreat, So Should You

High-level executives don't quit a company for personal reasons, so that is a sign something is wrong.

Rule 20: Giving Up on Value Is a Sin

If you don't have patience, think about letting someone who does run your money. 

Rule 21: Be a TV Critic

Accept that what you hear on television is probably right, but no more than that.

Rule 22: Wait 30 Days After Preannouncements

Preannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy. More

Rule 23: Beware of Wall Street Hype

Never underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason. 

Rule 24: Explain Your Picks

Buying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else. More

Rule 25: There's Always a Bull Market

It's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.