• Understand the nature of the companies you own and the specific reasons for holding the stock. (“It is really going up!” doesn’t count.)
• By putting your stocks into categories you’ll have a better idea of what to expect from them.
• Big companies have small moves, small companies have big moves.
• Consider the size of a company if you expect it to profit from a specific product
• Look for small companies that are already profitable and have proven that their concept can be replicated
• Be suspicious of companies with growth rates of 50 to 100 percent a year
• Avoid hot stocks in hot industries
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These are some lessons that peter lynch thought us in one up on wall street
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Similar ideas to Here are some pointers from this section:
Once you have your capital, invest 50% of it into bonds or an index fund (depending on market conditions) while the other 50% to be invested on individual stocks.
However, when investing on individual stocks make sure of the ff:
• Sometime in the next month, year, or three years, the market will decline sharply.
• Market declines are great opportunities to buy stocks in companies you like. Corrections—Wall Street’s definition of going down a lot—push outstanding companies to bargain prices.
• Trying to predic...
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