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Non-Tech : Another Investment forum
QQQ 623.28+0.7%Nov 5 4:00 PM EST
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To: richardred who wrote (77)1/23/2007 10:36:44 PM
From: Peter Dierks  Read Replies (1) of 340
 
A man who is selling his business asked my advice. I sent him this advice in an email to follow up on a conversation we had.

My mother told me to buy stocks in companies whose products I used. Then use and recommend their products.

Every fund family has index funds. People always talk about "hot" funds. I evaluate the funds I invest in annually. I always include an Index 500 fund in every retirement account. It tends to perform in the top 1/3 of funds every year. "Hot" funds have great years, but then suffer in their off years. (There are exceptions - I seem to recall that the Fidelity Magellan Fund did better than 20% returns on investment almost every year of its first decade under manager Peter Lynch. Money doubles every four or five years with those returns.)

If any investment falls by 10% to 15% from your purchase price, sell it immediately. It is an investment, you are not married to it. Don't every try to catch falling knives, I always seem to get cut when I try it. If an investment falls 10% to 15% from its high trading price, sell it immediately. This is alone will differentiate you from amateur investors.

If an investment doubles, sell half and reinvest in something else.

Use dollar cost averaging. (http://beginnersinvest.about.com/cs/newinvestors/a/041901a.htm)

Rising tides raise all ships, it does not make you a genius.
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