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Investments Inc.

Investment Rules

These rules are from Benj's book, The Uncommon Investor: A Contrarian Guide to Investing in the Stock Market. A new edition will be published in the fall of 2008.

  • A
    A Contrarian Chooses When to Go Against the Crowd
    Always Set a Sell Target
    Always Think in percentage Terms
    Analyze Your Mistakes
    Ask Yourself: When Is Enough, Enough?
    Avoid Crowd Psychology
    Avoid Debt-Laden Companies

  • B
    Be Lazy and Let Others Do Research for You
    Beat the Market. Not Yourself
    Before Buying, Check the Order Quantities
    Before Buying, Test Your Idea on People You Respect
    Buy on Weakness. Sell on Strength
    Buy the Management. Check Her/His Track Record
    Buy When a Stock Has Few Friends
    Buying Dividend-Paying Stocks Is a Definitive Advantage

  • C
    Carefully Consider Buying in December
    Carefully Match Your Personal and Investment Needs
    Check How Much of the Corporation Management Owns
    Check Demographic Trends
    Check for Insider Trading

  • D
    Defer Taxes Where Possible
    Divide Your Funds into Weighted Investment Packages
    Do Not Fear Numbers
    Do Not Invest a Specified Amount in Stocks Every Month
    Do Tax Planning
    Do Well, While Doing Good
    Don't Always Focus on Money, Make Dinner With Your Honey
    Don't Believe that Something Cheap Is Necessarily Undervalued
    Don't Be a Trader. Invest for the Long Term
    Don't Invest More than You Can Afford to Lose

  • E
    Every Six Weeks, Review Every Stock
    Examine the Ten-Year Price Range

  • H
    High R&D Expenditures Are a Positive Long-Term Indicator
    Higher Risk, Higher Potential Reward
    History Is an Excellent Teacher

  • I
    If a Stock Sinks, Consider Averaging Down
    If You Miss One Train, Another Will Come Along
    Imagine the Worst Case Scenario
    Invest Early and Often
    Invest So You Can Sleep Comfortably

  • K
    Know Thyself

  • L
    Learn to Understand Financial Statements

  • N
    Never Average Up
    Never Buy a Stock You Think Will Undergo a Share Consolidation
    Never Buy Firms With a Share Price over $25
    Never Buy on Margin
    Never Buy on Rumour. Do Research
    Never Give a Broker Discretionary Power
    Never Short a Stock
    Never Use Stop Losses

  • O
    Over Time, Mutual Funds Perform Worse than the Overall Markets
    Over the Long Term, Luck Balances Out
    Only Consider Stocks Trading Within 30 Percent of Their 52-Week Low
    Only Consider Stocks Trading At Less than 50 Percent of Their 52-Week High
    Only Buy Corporations that Have Been Listed for a Minimum of Ten Years
    Only Buy Stocks Listed on Major Exchanges

  • P
    Pay Off Your Debts

  • R
    Reanalyze but Don't Ulcerate over Your Sales
    Reevaluate the Stock Carefully When Considering a Sale
    Reevaluate Your System Periodically, Allowing It to Evolve
    Review Stocks You Own Every Three Months, Concentrating on Their Debt

  • S
    Search for a Broker With Experience
    Sell a Minimum of 50 Percent of the Stock Near the Target
    Set Realistic Financial Goals

    Split Assets between Different Institutions for Safety
    Stockbrokers' Results Typically Lag the Market Averages
    Study Management

  • T
    Take Carefully Calculated Risks
    Take Periodic Breaks from the Market
    Talk to Management
    The Greater the Diversification, the Lower the Rate of Return
    The Lower the Stock Price, the Greater Both the Risks and Rewards
    The Target Price Must Be a Minimum of 50 Percent Higher than the Buy Price
    Try to Store Money for Emergencies

  • W
    Wait to Tender on a Takeover
    Watch Trading Volumes
    What Will I Give Back?
    Without Discipline, You Have No Method
    Write the Corporation for Information
    Write a Stock Watch List

  • . . . Sit . . . Relax . . . Wait . . .
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