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Dividend University

The Unofficial Guide to Being an Investor

Investing advice seems to be filled with the same old adages and sayings that have been overused and diluted as time progresses. Since we live in a world dominated by technology and its rapid growth rate, what it means to be an investor today is a lot different than just a few decades ago. Below, we outline how to be an investor in today’s fast-paced markets.

1. If you can’t understand how a security works in 10 minutes, walk away.

2. Spend $2.99 and buy Warren Buffett’s shareholder letters. It’s the second-best investment you’ll ever make.

3. Spend a weekend reading Warren Buffett’s shareholder letters. It’s the best investment you’ll ever make.

4. Sit down and read a 10-K. You’ll be surprised at how much you learn.

5. Always reinvest dividends. And if you can’t do it for free, find a new broker.

6. Max out your IRA every year.

7. Start a 529 plan the month your first child is born.

8. Be skeptical: If someone “knows” where a security is going, they’d be on their yacht by now.

9. If a stock has an 8% dividend yield, there’s a reason why. Figure out what it is.

10. Make use of limit orders.

11. The four most expensive words in the English language are “this time it’s different.” – Sir John Templeton.

12. Bull markets take the stairs. Bear markets take the elevator.

13. Don’t gloat. Don’t cry. Your ego has no place in trading.

14. It’s called investing, not gambling.

15. Learn what a front end load is. If you’ve been paying them, it’s time to find a new financial advisor.

16. If anyone tells you that gold is going to $10,000, don’t take anything they say seriously.

17. If anyone tells you that gold is going to $100, don’t take anything they say seriously.

18. Trading is to investing as a sprint is to a marathon. Know which race you’re in.

19. Leveraged investing is like using a chainsaw; if you don’t know what you are doing, you can really make a mess of things.

20. Past performance does not guarantee future results.

21. Cost matters. Know every fee that you are paying and why you are paying it.

22. Diversify, rebalance and re-diversify.

23. Don’t buy the rumor, don’t sell the tweet.

24. Shorts have unlimited downside. Be ready to cover.

25. Missing an opportunity is frustrating. Losing capital is destructive.

26. Big banks manipulate, the Fed throws off fundamentals. Get over it.

27. When it comes to investing, taxes are the only sure thing.

28. Follow @ritholtz, @ReformedBroker, @abnormalreturns and @howardlindzon on Twitter.

29. “Be greedy when others are fearful, be fearful when others are greedy” – Warren Buffett.

30. The world didn’t end in 2012. Stop reading “the sky is falling” publications.

31. Perma-bears are just angry about missing market rallies.

32. Let winners ride, cut losers early.

33. Not all gains are created equal. Good risk-adjusted returns will keep you in the game.

34. If major news networks say buy, it’s already too late.

35. Sell half when your position doubles. You won’t go broke by taking profits.

36. Don’t react or you’ll always be late. Learn to anticipate.

37. If you’re buying gold in preparation for the apocalypse, maybe you should buy guns and canned food instead.

38. Drop your confirmation bias. “Feeling good” about your investments is different than being profitable.

39. Sometimes prices decline for a reason.

40. Learn to look for data that disputes your conclusion. If you can’t find any, look harder.

41. Don’t ask an economist for stock picks.

42. “Derivatives are financial weapons of mass destruction.” – Warren Buffett.

43. Don’t give your friends stock picks unless they can afford to lose that money.

44. Don’t trust your gut; trust your research.

45. There are always opportunities for sound investments.

46. The yen and the yuan are not the same thing. Be mindful of your currency exposure.

47. Sometimes the best trades are the ones you don’t make.

48. The trend is your friend; algorithms are not.

49. “The individual investor should act consistently as an investor and not as a speculator.” – Ben Graham

50. There’s no shame in a simple portfolio.

Disclosure: No positions at time of writing.