Rule No. 1: Bulls, Bears Make Money, Pigs Get Slaughtered
It's essential for all traders to know when to take some off the table.
Rule No. 2: It's OK to Pay the Taxes
Stop fearing the tax man and start fearing the loss man because gains can be fleeting.
Rule No. 3: Don't Buy All at Once
To maximize your profits, stage your buys, work your orders and try to get the best price over time.
Rule No. 4: Buy Damaged Stocks, Not Damaged Companies
There are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.
Rule No. 5: Diversify to Control Risk
If you control the downside and diversify your holdings, the upside will take care of itself.
Rule No. 6: Do Your Stock Homework
Before you buy any stock, it's important to research all aspects of the company.
Rule No. 7: No One Made a Dime by Panicking
There will always be a better time to leave the table, so it is best to avoid the fleeing masses.
Rule No. 8: Buy Best-of-Breed Companies
Investing in the more expensive stock is invariably worth it because you get piece of mind.
Rule No. 9: Defend Some Stocks, Not All
When trading gets tough, pick your favorite stocks and defend only those.
Rule No. 10: Bad Buys Won't Become Takeovers
Bad companies never get bids, so it's the good fundamentals you need to focus on.
Rule No. 11: Don't Own Too Many Names
It can be constraining, but it's better to have a few positions you know well and like.
Rule No. 12: Cash Is for Winners
If you don't like the market or have anything compelling to buy, it's never wrong to go with cash.
Rule No. 13: No Woulda, Shoulda, Couldas
This damaging emotion is destructive to the positive mindset needed to make investment decisions.
Rule No. 14: Expect, Don't Fear Corrections
It is not always clear when a correction will strike, so expect and be prepared for one at all times.
Rule No. 15: Don't Forget Bonds
It's important to watch more than stocks, and bonds are stocks' direct competition.
Rule No. 16: Never Subsidize Losers With Winners
Any trader stuck in this position would do well to sell sinking stocks and wait a day.
Rule No. 17: Check Hope at the Door
Hope is emotion, pure and simple, and trading is not a game of emotion.
Rule No. 18: Be Flexible
Recognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static.
Rule No. 19: When the Chiefs Retreat, So Should You
High-level executives don't quit a company for personal reasons, so that is a sign something is wrong.
Rule No. 20: Giving Up on Value Is a Sin
If you don't have patience, think about letting someone who does run your money.
Rule No. 21: Be a TV Critic
Accept that what you hear on television is probably right, but no more than that.
Rule No. 22: Wait 30 Days After Preannouncements
Preannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy.
Rule No. 23: Beware of Wall Street Hype
Never underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason.
Rule No. 24: Explain Your Picks
Buying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.
Rule No. 25: There's Always a Bull Market
It's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.
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