Saturday, June 13, 2009

Some basics to keep you out of trouble

Rule #1. Never buy a stock that is priced under $5.00. Most mutual funds have rules in their charters that do not allow them to purchase stocks under $5.00. It is very tempting to want to buy these shares and there is the occasional exception in this year 2009. (F,THC,UIS,ESLR).

Rule#2. If you trade a stock twice , and have gains both times, do not go back to the well and buy it a third time. This rule was put into place after some nosedive trade experiences with Krispy Kreme Donuts, (KKD), and Sirius Satellite Radio, (SIRI). They took me for a ride down a slippery slope on the third trade after some nice gains.

Rule#3. Only buy stocks that have earnings above $0.10 per share annually. This will keep you out of a lot of bad places.

Rule#4. Try to buy companies that are not loaded down with debt, or even better yet have zero debt.

These are a few to start out with that will keep you out of 80% of the trouble you can find.

Sincerest Regards,


1 comment:

  1. The Final Question - By Isaac Asimov 1956