Taking Stock: A tip sheet for successful investors

Dear Mr. Berko: I've read a few books on investing in the stock market, but they seem filled with useless information, boring example stories and futile formulas. I have $166,000 in stocks -- some good and some bad -- but what I need are some hard and fast rules to guide me so that I can be more sure of myself when I buy, sell or consider stock. I need to know if what I'm doing is right or wrong and how I can improve. Can you recommend a book for me, or can you give me some personal tips from your experience? MM in Springfield, Ill. Dear MM: The following is the best I can do. 1. Contrary to popular opinion, there are no good how-to books on the stock market. 2. Penny stocks are for fools and dreamers. 3. Most people lie about their losses, and they really lie about their profits. 4. Join an investment club. They are excellent venues where you can learn about investing and meet likeminded people. Some investment clubs actually become big businesses. 5. Always be an investor and not a trader. Trading stocks is like betting on the ponies, and very few traders have enjoyed long term success. 6. Learn and master the Rule of 72. 7. Almost every tout service (a service that deals in stock market advisory letters) lies through its teeth about its successes. 8. Most brokers will tell you the truth -- but seldom the whole truth. 9. Overnight success in the stock market takes between four and seven years. 10. Losing money is a far less regrettable alternative than losing an opportunity. 11. Do not ascribe long-term consequences to short-term events. 12. Never try to hit home runs. Rather, build your portfolio with walks, singles and doubles. 13. Be mindful that a diversified portfolio is one of the most important ingredients to financial success. 14. Stay away from emerging markets. No matter how good they look, these markets are for riverboat gamblers. 15. Stay away from chartists, market timers and computer-generated buy- or sell-signals. 16. Don't own cyclical stocks. Few of us are wise enough to recognize the top or bottom of a cycle. 17. Never put more than 8 percent of your investible funds in one stock. 18. Always own stocks that have strong dividend growth, and allow that strong dividend growth to create principle growth. 19. Whenever possible, always reinvest all your dividends. 20. Never quibble about an eighth or a quarter of point. Small fractions are meaningless if you're a long-term investor seeking a 50-percent return or more. 21. Always place your orders "at the market." Many opportunities have been squandered in allowing dimes to trump dollars. 22. Don't purchase a stock right after it splits. Wait six to 10 weeks, and you'll almost always buy it at a lower price. 23. Always set a target price for the stocks you own. When they approach l5 to 20 percent of that price re-evaluate your price objective. 24. Improving net profit margins is the best indicator of management skills. 25. Always keep 20 to 25 percent of your investible funds in cash or equivalents. 26. Only buy no-load funds. 27. Value Line Investment Survey is one of the best sources for clear and easy-to-understand balance-sheet and income-statement data. 28. Know that angels fly because they take themselves lightly. 29. Understand that during most market years, you will be the pigeon, but that there will be some market years when you will be a statue. 30. Know that good judgment comes from experience and that experience comes from lots of bad judgment. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2011 Creators Syndicate Inc. Published: Fri, Aug 19, 2011