20 Investment rules for a successful investor. We looked at what common factors existed before these big winners had big gains and how they changed when the stocks reached their peaks.
As a result, these rules demonstrate how the market actually operates. You are arguing with how the market has behaved for over 100 years if you ignore them and rely instead on personal opinions, feelings, tips, or emotions. You will almost certainly make more costly mistakes. History can teach you a lot.
20 Investment Rules For A Successful Investor
1) Look for stocks with earnings that have increased by 25% or more over the last three years, a return on equity of 17% or more, and recent quarterly earnings and sales that are increasing.
2) Recent quarterly earnings and sales should have increased by at least 25%, preferably by 40% or more.
3) Current quarterly after-tax profit margins should be improving, approaching their peak, and ranking among the best in the stock market.
4) Dividends and P-E ratios aren’t reasons to buy. On Investors.com, you can read about a stock. Purchase the industry’s best stock in terms of earnings and sales growth, return on equity, profit margins, and product quality.
5) Always consult charts to identify solid chart bases and precise buy points. As stocks emerge on large volume increases, limit all buys to specific points. Stocks should not be chased.
6) Always cut a loss when it’s less than 8% of your cost. Make no exceptions to avoid any potentially catastrophic losses. Never, ever.
7) Invest in start-ups based in New America. Pay attention to companies that have had initial public offerings (IPOs) within the last 15 years.
8) Look for stocks that have seen an increase in institutional backing in recent quarters.
9) Look for businesses that have a one-of-a-kind, superior new product or service that is leading its industry and gaining market share.
10) Look for companies that are buying back 5% to 10% of their stock or more, as well as those that have new management. What is the background of the management team?
11) Buy stocks with a Composite Rating of 90 or higher and a Relative Price Strength Rating of 85 or higher. Run a Checklist on the top 50 stocks.
12) New Highs List and Stocks On The Move for boldface stocks.
13) Look for stocks where the CEO owns stock.
14) Stay away from low-quality (Penny) stocks. Invest in stocks that are selling for $15 or more.
15) Don’t try to guess the market’s bottom or buy on the way down. Never try to reason with the market. Forget about your ego and pride.
16) When it’s time to sell, stick to the selling rules and take your profit on the way up. In “How to Make Money in Stocks,” go over “When to Sell and Take a Worthwhile Profit.”
17) Purchase when the market indexes are rising. If general market indexes show six days of increased volume distribution over a 25-day period, sell stocks and raise cash.
18) Learn how to spot major tops and bottoms in market indexes.
19) What sectors if any, do you think the market favors big-, mid- or small-cap stocks?
20) Perform a post-analysis on all of your buys and sells. Post where you bought and sold on the charts. To correct your major errors, always make a new rule. What matters is what you learn after you think you know what you’re doing. That is how you will learn to improve your performance.
Also, Read The golden rules of investing