5 Lesson for Investor

Lesson 1. What Every Investor Should Know Going In

• Cut your losses early. It’s like buying fire insurance.
• Always cut your losses at 8% below your purchase price.
Always sell your worst performing stock first, not your best-performing stock.

Lesson 2. Getting Started: There’s no time like the present!

Lesson 3. Follow a system rather than your emotions

Lesson 4. Fundamental analysis or technical analysis?

• Volume, or the number of shares of stock trades per day or per week is a key to interpreting supply and demand correctly. It is a signal that big institutions may be buying or selling your stock, which could impact price positively or negatively. The best institutional investors use both fundamental and technical analysis in their purchase decisions.
• Most of the big winners have Return on Equity ROE (an indicator of financial performance) of 20% or more. Most have management ownership or the management owns a percentage of the stock.

Lesson 5. First among fundamentals: Earnings and Sales

• Rule of thumb: Look for stocks with annual earnings growth rates of 30% or more and ROE’s of 17% or higher.
• Strong sales and earnings are among the most important characteristics of winning stocks.

Axioms of Investing

1. The First Major Axiom: ON RISK
Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.

Minor Axiom I: Always play for meaningful stakes.
Minor Axiom II: Resist the allure of diversification. By diversifying, you become a juggler trying to keep too many balls in the air all at once.

2. The Second Major Axiom: ON GREED

Always take your profit too soon.

Second Axiom advises you to do. It says, "Sell too soon." Don't wait for booms to reach their peaks. Don't hope for winning streaks to go on and on. Don't stretch your luck.

3. The Third Major Axiom :ON HOPE

When the ship starts to sink, don't pray. Jump.When it starts to sink. Don't wait until it is half submerged.

Don't hope, don't pray. Don't cover your eyes and stand there trembling. Look around at what's happening. Study the situation. Ask yourself whether the developing problem is likely to get fixed. Look for trustworthy and tangible evidence that improvement is on the way, and if you see none, take action without further delay. Calmly and deliberately, before everybody else has started to panic, jump off the ship and save yourself.

4. The Fourth Major Axiom :ON FORECAST

Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly.The conclusion is that it isn't very good. You cannot profit by listening to a prophet.

5.The Fifth Major Axiom: ON PATTERNS

Chaos is not dangerous until it begins to look orderly.

The truth is that the world of money is a world of patternless disorder, utter chaos. Patterns seem to appear in it from time to time, as do patterns in a cloudy sky or in the froth at the edge of the ocean. But they are ephemeral. They are not a sound basis on which to base one's plans. They are alluring, and they are always fooling smart people like -+