20 Tips to Keep Your Investing on Track

Focus: STRATEGIES

Michael Cintolo Image Michael Cintolo Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

While most investors tend to have some vague principles in their heads about their core investing principles, it's important to make a list and keep it around, so you can refer to your limits and goals observes Mike Cintolo of Cabot Wealth Advisory.

With basics in mind after the recent storms, now is as good a time as any to review the investing basics...though with 20 rules below, many of these probably aren’t basics to most investors.

Nevertheless, I have a list similar to this saved on my computer. Whenever I have some free time or am in a bit of a rut, it helps to go back, read through them, and make sure I’m not violating some core principles.

I view this as blocking-and-tackling sort of stuff—it doesn’t show up in the box score necessarily, but lots of investors go awry because they, for one reason or another, get off track and don’t adhere to the basics. Make sure that doesn’t happen to you!

Here are 20 of Cabot's top tips and tools that you can use to become a better investor:

  1. Cut losses short (definitely rule No. 1 for growth stock investing).
  1. Search for strong sales and earnings growth (especially triple-digit sales growth).
  1. Search for revolutionary products with major benefits. First Solar (FSLR), Crocs (CROX), and Green Mountain Coffee Roasters (GMCR) filled the bill and were some of our biggest winners.
  1. Heed the message of the overall market—never fight the main trend!
  1. Never average down in growth stocks.
  1. Be prepared for all contingencies (always have an exit plan ahead of time).
  1. Never try to buy at the bottom or sell at the top (if you try, you'll just lose more money).
  1. To avoid gut-wrenching volatility, stick with stocks that are liquid (at least 500,000 shares traded per day or more).
  1. Only put more money to work after your past purchases are showing you a profit.
  1. Be humble—making money in stocks is tough, so don't kill yourself over one or two bad trades.