| These days, investment experts come a dime a | | | | in the last market cycle won't necessarily apply to |
| dozen. In fact, it seems the only thing that isn't in | | | | the next. Don't lose sight of the broad market when |
| short supply on Wall Street is the investing 101 guru | | | | stock investing. |
| who claims to offer the best advice on how to | | | | Diversify, diversify, diversify. Any investor picks his |
| invest based on the top headlines that week. | | | | share of duds, and I'm no different. But overall, my |
| What these hucksters fail to deliver is a lasting | | | | portfolios always shine. That's because a diversified |
| strategy. No matter how eloquently you talk about | | | | portfolio-a mix of dozens of stocks in several |
| winning stocks, once you deconstruct the advice | | | | different investment areas-generally yields stronger, |
| several common elements emerge. These are basics | | | | steadier returns and poses less risk. That way, if |
| of Investing 101, and what everyone who plays the | | | | some of your investments perform poorly, your big |
| stock market game needs to know. | | | | gainers will neutralize your losses. Along the same |
| Ask the Experts | | | | lines, never let a single stock every become too big a |
| I dare you to actually ask your favorite expert | | | | part of your portfolio. If that one pick turns south, |
| exactly how they pick the stocks and funds he or | | | | you could see all your profits go up in smoke. I |
| she is recommending you buy today. I bet you won't | | | | always recommend taking "partial profits" in |
| get the full story. Here's my rule of thumb: If they'll | | | | companies like that, or selling a portion of your |
| dangle big fish in your face but they won't teach you | | | | holdings while keeping enough stock to continue to |
| how to reel one in yourself, RUN! | | | | cash in if the ride isn't over yet. |
| Let's cut to the chase: Investing comes down to a | | | | Always sell into strength. Buy low and sell high. Easier |
| few very basic principles, and I gain nothing by | | | | said than done? Perhaps, but remember: Even if a |
| keeping secrets. What drives me is empowering you | | | | stuck plummets on bad news or some inherent |
| to pick the best stocks to buy. All investors deserve | | | | weakness, sell some of your position at first, then |
| reliable information and instruction so they can craft | | | | wait a bit in case you can cash in on a "dead cat |
| an investment strategy that fits their specific | | | | bounce." At least that way you're minimizing your |
| needs-not the generalized needs of a massive | | | | losses. But don't wait too long. Chances are if you |
| audience. | | | | hold too long, you'll be out a lot more than you |
| Investing 101: Understanding the Stock Market | | | | bargained for. |
| Here's what you should do first when starting your | | | | Expect Volatility. Don't be afraid of big market |
| investment research: | | | | swings, because you can profit from them! By |
| Get a feel for the numbers. Most research is very | | | | learning to deal with volatility, you can make money |
| subjective, with analysts offering estimates and | | | | in even the most topsy-turvy market environments. I |
| opinions on the value of a particular stock. I zero in | | | | advise you to stick to the 60-30-10 rule: 60% of |
| on eight key fundamentals: Positive Earnings | | | | your portfolio should be in the most conservative |
| Revisions, Positive Earnings Surprises, Increasing | | | | stocks, 30% in moderately aggressive stocks and |
| Sales, Expanding Operating Margins, Free Cash Flow, | | | | 10% in aggressive stocks. This mix gives us the |
| Earnings Growth, Positive Earnings Momentum and | | | | smoothest path to profits over the long run. |
| Return on Equity. Together, these eight fundamentals | | | | Especially when the market is volatile, this mix keeps |
| will help you find the best stocks to buy on Wall | | | | our portfolios afloat! The 60-30-10 rule keeps us |
| Street. There are numerous websites that allow you | | | | locked and loaded, even when the market fluctuates |
| to access such information on virtually any stock | | | | day-to-day. |
| instantly, so use whichever feels right to you. | | | | So you see? These Investing 101 tips are |
| Focus on the future. Don't dwell on past mistakes, | | | | recommended by the most well-known investment |
| and don't get too caught up in checking prices every | | | | experts. The only thing that's different is the way |
| hour. It's important that you stay focused on long | | | | they say them. |
| term performance when stock investing. I've certainly | | | | My point to you is this: Don't think your investing |
| had my share of bad days, but my Emerging Growth | | | | strategy is all wrong just because it isn't in sync with |
| newsletter has beat the market 4-to-1 nearly every | | | | what the latest guru on Wall Street thinks is the |
| year in the 28 years I've been writing it. Investors | | | | flavor of the week. As long as you do your |
| that work day-in and day-out in the stock market | | | | homework and keep up with the broad market |
| develop a serious case of tunnel vision when it | | | | trends, you'll profit along with the best of them! |
| comes to picking stocks. Remember, what happened | | | | |