How To Invest

In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.

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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.

If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)

If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.

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How To Invest Library Archives
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“Early in my investment career, I developed a keen interest in what we called “investor rules of thumb.” Here are some random examples:


“Stocks trading at a P/E ratio of 10 times per share earnings or less are good buys.”


“As January goes, so goes the year.” In other words, if the stock market goes up in January, it will probably have a gain for the year, as a whole.”


“When a stock rises and its volume of trading expands as well, it’s likely to keep rising.”


The downfall of all market indicators is that they entice you into basing a decision on a narrow range of information....

Here’s an Excerpt from a recent issue of Advice for Inner Circle Pro Members:


“Early in my investment career, I developed a keen interest in what we called “investor rules of thumb.” Here are some random examples:


“Stocks trading at a P/E ratio of 10 times per-share earnings or less are good buys.”


“As January goes, so goes the year.” In other words, if the stock market goes up in January, it will probably have a gain for the year, as a whole.


“When a stock rises and its volume of trading expands as well, it’s likely to keep rising.”


The downfall of all market indicators is that they entice you into basing a decision on a narrow range of information....
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Here’s an excerpt from a recent issue of Advice for Inner Circle Pro Members:


“Early in my investment career, I developed a keen interest in what we called “investor rules of thumb.” Here are some random examples:


“Stocks trading at a P/E ratio of 10 times per-share earnings or less are good buys.”


“As January goes, so goes the year.” In other words, if the stock market goes up in January, it will probably have a gain for the year, as a whole.


“When a stock rises and its volume of trading expands as well, it’s likely to keep rising.”


The downfall of all market indicators is that they entice you into basing a decision on a narrow range of information....
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