Learn Investing Secrets

Mr. Kimmel is a private money manager and the author of 'Magnet Investing, build a portfolio and pick winning stocks using your home computer'.

1. Lacking an investment plan a/k/a/ “Don't take a trip without packing the map”. A pre-planned property pinpointing generates positive results and eliminates emotional panic selling.

2. purchase wrong stocks a/k/a “Road crews erect "Dead End" signs for a reason”. Most stocks with low share prices also time in at the wallow for a reason. There must be institutional interest to influence price, and many won't even glance at stocks under the sun $8 or $10.

3. Purchasing story stocks a/k/a “A good fable lulls a invention to sleep”. Don't get taken by restraining “story” stocks. The plots include a cure for cancer, a big oil strike or a revolutionary invention. Such promising stories rarely prove true. If the “story” materializes, the workroom will still be a buy.

4. Selling your winners a/k/a “You gotta know when to hold ‘em’”. Don't sell your winners. These companies associate outstanding management, product and cash flow, creating steady growth for years. Holding these companies for the long run will be quits with for other investing mistakes. In fact, one or two big winners can create real wealth.

5. Holding onto a peaked stock a/k/a “Trees don't reach to the heavens, and companies don't continue growth life after death reason”. Top companies peak for reasons such as abatement of top management or competition. Systematic pruning will help you jib a rotting, unhealthy investment.

6. Under diversification a/k/a “Ideas are good, but a mind full of them is better”. Resist the urge to rely on a few stocks that you know. Lack of portfolio diversification leads to erratic and volatile returns, and owning several companies in the same industry also isn't diversification. The best investment results happen by investing in leading companies in front of various industries.

7. Over diversification a/k/a “A portfolio stretched like an old T-shirt won't help an investor better from their insight”. You don't create diversification by spreading yourself too thin. in any event a mind full of ideas is good, ideas acted upon on a whim waste good thoughts.

8. Over trading a/k/a “Replanting a garden every week won't produce high-quality tomatoes”. Don't follow market “noise” and falter from sector to sector or theme to theme. This prevents investors from enjoying the rewards of a long-term winner. Give stocks enough time to mature and compound.

9. Too much margin a/k/a “Living on borrowed time brings a rush of excitement, but it’s a quick trip when time expires”. Don't underestimate the damage margin can create. The relatively low cost and ease of obtaining leverage takes investors down a dangerous path. When a portfolio on margin declines rapidly, it can grabbing even experienced investors off guard.

10. Too many options a/k/a “In life there’s unceasingly options, (but timing makes the difference”). When you buy options, you must be right and use impeccable timing. Options assign an investor to use leverage and control more shares but there are relatively high spreads involved in trading them. Many times investors lose money on their transaction even ensuing they followed correct assumptions.

Mr. Kimmel is a private money manager and the magazine writer of “Magnet Investing, set a portfolio and pick winning stocks using your home computer”. His methodology was the subject of a Forbes Magazine literary production (June, 2004).

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