"Money is like manure. You have to spread it around or it smells. "

-J. Paul Getty-

   As I stated on the home page, I have been investing in the stock market for over thirty years. During this time I have had some major successes, but like a warrior that has fought in many battles, I have suffered some nasty wounds as well. Each time I have encountered a setback, I have gone back to my basic set of rules that I have created over the years and have analyzed my missteps. Sometimes I have to make up a new rule. Below is a culmination of these efforts.

1. You and only you can take responsibility for managing your finances--not a financial planner, not a broker, not a banker, not your Uncle Fred, not anyone.
2. If you are completely new to stock investing, I strongly recommend that you "paper trade" for at least one year. That is, pretend you are buying and selling stocks. Keep a journal of your transactions and why you bought and sold. Learn from your mistakes and build from your successes.
3. You must have more than a slight exposure to accounting principles. When you are reading annual reports, it is a necessity to understand the financial section that contain profit and loss statements, balance sheets, and cash flow analysis. If accounting is fuzzy to you, take a course.
4. Establish a loss level that you can tolerate on every buy. If your stock falls to that level, sell. My range is 6-10%, depending on the situation. This will be a hard rule to follow, but it will keep you from getting wiped out by another Enron or WorldCom.
5. Invest in companies that you know. If you work for a public chemical company, know how your firm stacks up against the competition. Compare revenue, debt levels, return on equity, etc. Refer to Rule #3. Become familiar with the cycles of your industry. Do all stocks in this sector follow the same pattern?
6. Don't buy stocks based on hot tips, magazine articles, CNBC reports, Wall Street Journal articles, analysts' touts, etc. I do not know if any entity keeps statistics of media touts, but I would bet their percentage of successes would be rather low.
7. Invest only in companies that have little or no debt. While there are a lot of successful companies with tons of debt, there have been companies that have folded because of large debt. Companies take on debt because their cash flow is not sufficient to fund expansion. There are too many good companies to choose from that manage their finances well and do not take on huge amounts of debt.
8. Invest only in companies that have real revenue. This leaves out developmental drug and biotech companies that are awaiting approval on their only product, small manufacturing companies negotiating with IBM (or whomever) on that "big contract," or "pie in the sky" pioneer products. Granted the successful technology companies of today got their start as developmental companies, but the odds in picking the next Microsoft are against you. In fact, I would not invest in a company with less than $300 million in annual revenue.
9. Always buy on your own terms. You are the buyer--you control the situation. If you think a stock is a good buy at $15, don't buy it if it jumps to $17.
10. Create your own set of rules and follow them diligently.