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Stocks 508: 20 Stock-Investing Tips

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1.
All else equal, you should be most interested in buying _______.
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A wide-moat company with mediocre management. Remember, the economics of a business usually trumps the competence of management.
2.
Which of the following activities is most likely to improve your investing skills?
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Reading one of your companys annual reports. Reading annual reports will help you know more about your companies, which will make you a better investor. By constantly looking at unrealized capital gains, you may be anchoring on an irrelevant data point--the price you paid--concerning the future value of a stock.
3.
A good investor ______.
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Is willing to go against the crowd. The crowd is often -- but not always -- wrong.
4.
Being a stubborn investor will always pay off.
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False. Often, being stubborn will lead to losses. If youre holding a stock whose company is foundering, it may not be wise to hold onto it.
5.
What sort of expectation should a stock investor have regarding success?
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Success should be something you are willing to wait for. Even though stocks have historically returned in the 10% range, you must still have patience when investing in them. If you expect to get rich quickly, you will most likely be disappointed, and you may find yourself drawn to speculating, which is very volatile.