Things I Have Learned the Hard Way --

Bob White's Rules of Investing (in no particular order):

1) If a stock you own takes a big drop, never Never NEVER double up on it. There is probably something you don't understand. You might make money for a few times, but sooner or later, you will fall in love with some dog that will knock a big chunk out of your bankroll.

2) Buy carefully, sell reluctantly.

3) Avoid taking a big loss at all costs. If you have a 50% loss, you need a 100% gain to get back to where you were. Once a stock drops 15 to 20%, sell it and move on.

4) Don't try to catch a falling knife. Let the other guy buy at the bottom. Wait for it to head up . . . in a year, it won't matter much at exactly when you buy, as long as it does not keep falling. The first guy over the wall in a charge just about always gets shot.

5) The trend is your friend, if the trend is going up.

6) Be Patient!

7) Never have more than 10% of your portfolio in any one stock. Never have more than 20% in any one sector.

8) If a stock looks too good to be true, it probably is.

9) Don't buy or sell on one day's news. You will probably get a better deal tomorrow or the day after.

10) Pick stocks like annuities. The underlying value of the stock is the net present value of future earnings - PERIOD.

11) Don't buy at the open . . . and don't sell at the close. Don't buy on Monday . . . and don't sell on Friday.

12) Use limit orders - market orders might save you a few bucks in commission, but will cost you more in execution price in the long run.

13) Don't sell your winners and hang on to your losers - sell your losers and let your winners run.

14) Buy a stock like you are buying a partnership in a business. You wouldn't buy into a business if the management is inexperienced or overpaid, or if the earnings and earnings growth were out of line with respect to the price.

15) 80% of your profits will come from 20% of your holdings. Similarly 80% of your losses will come from 20% of you holdings. Concentrate on the 20%.

16) Limit your holdings to about 25 stocks. More than that is too hard to keep up with, and important developments can slip through the crack of the daily barrage of company news.

17) A good dividend helps reduce volatility of a stock. Having a big fraction of your portfolio in dividend-paying stocks or bonds will significantly reduce your portfolio's volatility, and will keep you from doing stupid like selling into a bad market only to see it rebound a few days later.

18) Your time is better spent looking for value in stocks that are making new 52-week highs than stocks that are making new 52-week lows.

19) When you decide to pull the trigger on a trade, don't diddle around trying to make a few cents with your limit orders - pull the trigger HARD. A year from now, a few cents difference won't really matter. If you decide to buy or sell, chances are good that a lot of other people are making the same decision, and the price will move sharply one way or the other.

20) Avoid situations where you are risking a lot of money for a small gain (such as short sales). Seek out situations where you are risking a little money for large gains. Avoid trading to gain a few cents in a day's time - sooner or later something will happen and you will loose all your accumulated gains and then some.

21) Don't use stop orders except on very liquid investments. If it is thinly-traded, use stop-limit orders.

22) Don't participate in Dividend Reinvestment Plans - it creates a predictable demand for stock on the date dividends will be paid, and you are in effect entering a market buy order at a date and time the other shareholders are too.

23) Develop a system and stick to it. The 28-day moving average is a powerful way of deciding when to buy and sell stocks. It will keep you from riding a stock down too far and will keep you out of 'falling knife' situations.

24) When trading in CEFs, only buy when all of the following conditions are met: a) the stock is selling at a discount to NAV, b & c) both the stock price and the NAV are above the 28-day moving average. Sell if any of the above conditions are no longer true.

25) When markets are acting crazy, get out - the big money traders are better equipped to handle volatility then you can.

26) Never test the depth of the water with both feet.

27) Good judgment comes from bad experience, and a lot of that comes from bad judgment.

28) Never own more than 1/2-days average trading volume in any one stock.

29) Review the above rules periodically. More than likely, if you made a loosing trade, it is because you broke one or more of the above rules.