Originally Posted by AVoiceOfReason

Those that are investing in the stock market, here's a few things I've learned, a series of "Don't":

1. Don't try to catch a falling knife. If a stock is falling, no matter how good the company is, don't buy it hoping you've caught it at the bottom. Stay away from what you THINK is the bottom, because often it isn't.

2. Don't be afraid to admit you made a mistake in a purchase. If a stock is not behaving properly, sell it.

3. Along with # 2, don't be afraid that the day after you sell, a stock will rocket up and you'll have missed it. You have to make the best call you can at the time. To help you do that, set a predetermined limit how much of a loss you'll be willing to take in a stock, and when you hit it, sell it. Don't watch it and hope it turns around the next week. Just pull the trigger and move on.

4. Don't get industry laggards in your portfolio. Buy the best company in a particular sector. Quality stocks cost more money, but there's a reason to buy quality.

5. Don't be someone that buys a stock and then holds it forever. Again tied to number 2 above, you may have picked one at the right time for awhile, but it's time is over. If you bought Microsoft 10 years ago, you had a good winner for the first 5 years and one that has been flat for the last 5. Why keep it? Take that money and use your noodle to find the next Microsoft for the next 5 years--you did it once!

6. Don't try to be the smartest guy or gal in the market--you aren't. You don't know anything that the folks on Wall Street don't know. You can't time a buy and sell to take advantage of a situation any better than those that do it for a living do. Let the trend be your friend, and don't fight it.

7. Don't borrow money to invest in stocks--in other words, no margin accounts. Those can force you to make decisions you wouldn't ordinarily make, and besides that, paying interest on the money that you use to buy a stock can eat up whatever profit you were expecting.

8. Don't think you can violate these rules consistently and win. Now and then, you can act contra to them and do OK, but on whole, you'll lose if you do.