RULE
1: WHY DO YOU INVEST?
Make more money, this is the answer to
most people.
If your reason is to make more money, then ask yourself these three
questions:
1.Is your strategy
making money?
2.Is your strategy safe?
3.How to increase the profit and minimize the
risk?
RULE 2: HOW TO CREATE WEALTH
IN STOCK MARKET WITH JUST $1,000
Let say we invest some lower price stocks
with just $1,000 in the stock market, invest twice a year for short-to-medium
term. If each time the return is double, you will make one million dollar
cash within 5 years. If your starting capital is $20,000, after 3 years
you will make one million dollar cash.
If you are using the same $1,000 capital,
invest twice a year, but the return is only 50%, you will make one million
dollar cash after 9 years.
So we can always start small. However,
it is very important that we know how to select high profit and low
risk stocks.
RULE 3: DON'T GET OBSESSED
WITH STOCKS
Sitting and monitoring the market whole
day long will not bring you profit. Instead, it increases pressure and
misleads your judgment.
RULE 4: NEVER GAMBLE
95% of the people always buy at the highest
price. They don't really know when to buy, just relying on news, rumors
and tips. Only 5% of the people knows how to
trade at the lowest price. That's why 95% are losing money, only the
5% are making money.
Investment Builds Wealth, Gambling Definitely Lose
!
RULE 5: SAY GOODBYE TO NEWS
News used to be able to predict the market
trend. But not anymore, it is difficult to judge which news could actually
influence the market nowadays.
RULE 6: DO YOUR OWN ANALYSIS,
FORGET ABOUT TIPS
Before investing, ask yourself these four
questions:
1.How many people
have already heard about the tips before you?
If many have heard about it before you, this news is already obsolete.
The price is already high.
2.How long have
the tips been spreading before it reaches you?
The next day?
3.Who told you?
Listed company director? Or friends?
4.Assuming that the
tip is true, would you possibly know about it?
Normally insider news is not disclosed.
RULE 7: SELL YOUR STOCKS
EVEN LOSING MONEY
It is easier to be said than done.
Sell at a loss is a difficult decision.
Your heart will object, and your feeling will say "It is going
to rebound, don't sell." Eventually price dropped further, causing
a much tragic lost.
RULE 8: DON'T JUST FOCUS
ON MAKING MONEY
How to protect your capital is much more
important. Don't try to make 100% profit. It is already good enough
to have a 60% profit margin.
RULE 9: HISTORY WILL NOT
ALWAYS REPEAT
Everyone expects to make some money from
the stock market before Christmas, New Year, annual budget announcement
or election, but the stock market is not always bullish during these
events. We can say history is not always repeated.
The best way is "Let the Market Lead us".
RULE 10: QUOTES FROM WARREN
BUFFET
There are only two rules to make money
in stock market:
The first rule: Never lose your money.
The second rule: Never forget the first rule.
RULE 11: TURN BAD STOCKS
INTO GOOD STOCKS, DON'T JUST HOLD YOUR STOCKS
Don't hold your stock too long, there is a value when stocks are sold.
How long have you been holding your stocks
until now?
Since Year 1993? 1997? Or
Year 2000?
Why didn't you exercise your stocks? Long
term investment strategy is not practical anymore. Even the blue chips
also crash when the market collapses.
The best strategy is to sell the stocks
that are not earning money, and reselect some good counters. Buy low,
sell high for several times will earn you more than enough to compensate
the lost.
RULE 12: WAKE UP FROM MISTAKES
Stop investing if you are not sure of
when to buy or sell.
Without the knowledge of investment, you
are bound to lose again. This is an age of information. Investors are
using knowledge, techniques and strategies to make money. Without investment
knowledge, how do you protect your money?
Building wealth through investing starts
with securing your capital.
Dr. Steven Lee (Ph.D) is # 1 Best-Selling
Author of Creating Wealth in Stock Market
Get your free ebook "Money Fish" from http://www.DrStevenLee.com
Published - December 2006
