follow us on twitter golden investment rules "thx to Stockgod, Iancassel, Donotlose for being able to watch them make investment decisions" 1. always use fundamental analysis (FA) What is the current and past financial standing of the company? What is the expected short to longterm future of the company? What can you derive from the numbers? is there demand? are there too many costs? how are they managing finances? Only buy when fundamental analysis suggests the stockprice is cheap always invest in companies that are growing topline quarter by quarter. dont waste time in other companies make sure the demand of their product is very high 1a. include the market in your FA Include industry & general market FA How is the industry performing? how is the company relative to industry & market etc. How is the country performing in which you are investing? 2. always use technical analysis (TA) Use proven indicators such as Candle stick patterns, MA, bollingers or others to determine buy and sell points Is volume increasing or decreasing on specific indicators? Only buy when TA suggests the stockprice is starting to go up Never buy when the TA indicates there is no trend established yet unless your FA is rocksolid and i mean rocksolid. 2a. include the market in your TA Include industry & general market TA How is the industry performing by TA? how is the TA of stock relative to industry & market etc. Where do you expect the market to go? Is the market giving you TA indicators? 3. always use management analysis (MA) Can management be trusted? how did they act in the past? Watch and talk with MGT and get a feeling of the people Is the CEO a go-getter/visionary type of person? 4. always use product analysis Will there be or is there a huge demand for the product? How is the product positioned against competitors? How many products does the company have? How good is R&D in creating new products? Whats the trend? Is there product recognition? market share? growing or shrinking? why? What are mgt plans for the product and for expansion? 5. risk management never put in more than 30% into one stock keep it usually under 10% Put in more money where you have more of TA & FA confirmed and less where you are not sure 6. check the "story" of the stock How does the whole story of the company compare to others? People love to buy story stocks. How plausible or how easy is it to believe its the next big thing? 7. check share related info whats the shares outstanding (O/S) authorized? Whats the trend there? are there share buyback programs? is company talking to investors? How many shares are short? is it increasing decreasing? Why? 8. how to sell? buy low and sell high is the general rule buy on FA & TA and then start selling when the price goes up when your FA is rocksolid you can hold longer but every sharp up move (+10% or +20%) should be accompanied with some locking in profits (markets can turn and wipe out your profits) By selling and realigning your capital you can compound your money quicker 9. everything goes wrong. What now? Determine whether FA & TA are still in place. Would you buy at these levels based on FA&TA? If the answer is no consider selling and taking losses. If its yes you might consider buying more If FA is rocksolid then keep it but dont buy more. If TA is rocksolid hold and watch 10. never fall in love with a stock It clouds your thinking. You should prefer this checklist over any other method of stockpicking 11. get in early the higher a stock is and the more it had volume in the past the more potential sellers are aligned the earlier you get into a stock the less sellers are aligned (assuming no insider and convertible transactions) 12. dont ignore rumors Rumors do move stock prices. Compare rumors to actual information you have. Dig for more information if necessary The extra insight will give you the edge 13. always read the SEC filings fundamental data and otherwise important information can be inaccurate or missing in press releases or 3rd party websites the O/S count is often wrong on 3rd party websites 14. average down the smart way when a stock falls dont keep averaging down like crazy. use this system: you buy for 1000 at 10. Then you buy for 1000 at 9 for 1000 at 8 and so own. golden rule. never average down to have more than 30% of portfolio exposed. preferably only 10% 15. always buy cheap companies the best returns are expected from companies below 100m market cap everything above is going to move slower naturally plus big investors and analysts dont have incentive to manipulate with small stocks and they usually dont move on market sentiment 16. take a longterm approach aim to 15-40% return yearly everything thats above is nice but not realistic on longterm basis think of companies if they will still be here in 10-20 years