Stock Market Rules

by MICHAEL D. SHEIMO

01: Sell the Losers and Let the Winners Run
02: Make Winners Win Big
03: Losers Demand Careful Strategy
04: It Is Better to Average Up Than to Average Down
05: Good Companies Buy Their Own Stock
06: Price Doubling Is Easy at Low Prices
07: Look for Insider Trading
08: Buy Low, Sell High
09: Buy High, Sell Higher
10: Buy on the Rumor, Sell on the News
11: Sell High, Buy Low
12: The Perfect Hedge Is Short against the Box
13: Never Short a Dull Market
14: Never Short the Trend
15: Never Buy a Stock Because It Has a Low Price
16: Beware the "Penny Stock"
17: Give Stop Orders Wiggle Room
18: Buy the Stock That Splits
19: Institutions Show Where the Action Is Now
20: Avoid Heavy Positions in Thinly Traded Stocks
21: There Are at Least Two Sides to a Story
22: Follow a Few Stocks Well
23: Be Wary of Stock Ideas from a Neighbor
24: Get Information before You Invest, Not After
25: Never Fight the Tape
26: Heavy Volume, the Price Rises-Light Volume, the Price Falls
27: Buy on Weakness, Sell on Strength
28: It Is Best to Trade "At the Market"
29: Understand the Types of Orders
30: Order Modifications Might Cause Delay
31: Remember That Others Might Have the Same Idea
32: Use Limit Orders as Insurance
33: Values Can Be Found Bottom Fishing
34: Heavily Margined, Heavily Watched
35: Winners Keep on Winning
36: Indicators Can Meet Overriding Factors
37: Take a Loss Quickly
38: Beware the Triple Witching Hour
39: Buy on Monday, Sell on Friday
40: Never Get Married to the Stock
41: Diversification Is the Key to Portfolio Management
42: Partial Liquidation Might Be the Answer
43: Act Quickly, Study at Leisure
44: Records Can Make Money
45: Fraud Is Unpredictable
46: Use Margin for Leverage Only
47: Avoid Overtrading
48: Buy When There's Blood in the Streets
49: Look for Divergence in Trends
50: Invest in What You Know Best
51: Buy Stock Cheaper with Dollar Cost Averaging
52: There’s Always a Santa Claus Rally
53: There's Always a Year-End Sell-off
54: The First Week Determines the Year
55: It's Always a Bull Market
56: Watch the Bellwethers
57: Buy the Dips
58: Buy the Dow Dogs
59: A Trend Remains in Force until It Changes
60: It Depends on Support and Resistance
61: The Stock Market Predicts the Economy
62: There Is a Bear Market Coming
63: There Are More Advances in a Bear Market Than There Are Declines in a Bull Market
64: Use Protective Puts in Volatile Markets
65: The Stock Market Is a "Random Walk'
66: Use the Rule of 72 to Double
67: A Stock Price Splits When It Gets Too High
68: Join the Club
69: Small Stocks Make the "January Effect?
70: Invest According to Objectives


TOP 10 RULES OF INTERNET INVESTING (by Merril Lynch)

• Allocate no more than 5 to 10 per cent of a portfolio to direct internet investing.


• Own a basket of of stocks - don’t “bet the farm" on any one stock or the sector as a whole.


• Buy sector leaders with “huge opportunities, great management, and strong sequential revenue growth"


• Focus on company and industry fundamentals: “they matter"


• Be prepared for at least 50 per cent volatility in both directions.


• Recognise that “what looks like a bubble probably is": we think valuation floor is 75 per cent below current levels.


• Recognise that stocks trade on sentiment and catalysts, so look out for shifts.


• If desired , “trade around" core positions - “sell on spikes, buy on busts"


• If can’t stand the heat, remove self from kitchen