Tuesday, December 21, 2004

IBD mantra(s)

Investors Business Daily Founder Bill O'Neill sent me a Holiday
Greetings e-mail earlier today. He couldn't refrain from
disseminating the following advice, to which I adhere & agree:

10 Investment Resolutions to Keep in 2005

1. Cut losses short.
Always sell if a stock drops 7% or 8% below the price you paid for it.
Once a stock starts falling, losses can quickly get out of hand.
2. Don't take your fingertips off the market's pulse.
Don't try to beat the market when it's telling you to sell or stay
3. Stick mainly with top industries.
Roughly half of a successful stock's advance can be traced to the
industry or sector it's part of.
4. Look for fast-growing earnings.
Earnings growth is indisputably the main driver of stock advances.
5. Seek top sales growth, margins and return on equity.
After earnings, these are the primary financial indicators of strong
6. Look for strong price action.
The market's big paradox: Stocks at or near new highs tend to move
even higher.
7. Prefer stocks institutional investors are buying.
Follow the big money; it can lift stocks like no other market force
8. Understand the stock's story.
A hot new product? Tempting. But make sure you know the downside.
9. Ignore tips, rumors or opinions.
Or at least check them out yourself. There are no shortcuts to
successful investing.
10. Keep learning and learning and learning.
The more you know, the better you can handle the market's curveballs.

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