Creating a Disciplined Stock Selection Strategy

A written investment policy is probably the most important part of any investment plan. Before buying any additional investments, take the time to develop your own personalized investment policy listing specific selection criteria to be used when investing.

Make sure to include a well thought out sell plan. For example, individual stocks should be purchased with a targeted sell price in mind on the upside as well as the downside.

Mistakes to Avoid When Investing in Stocks

The following are seven major mistakes many investors make when investing in stocks:

1. Buying the most popular stocks.
2. Buying stocks on hot tips.
3. Investing in weak competitors.
4. Having more than 5% of your portfolio tied up in one stock.
5. Letting emotions dictate stock transactions.
6. Trying to time the market.
7. Not doing any or enough research.

Characteristics of Stock Pros

Well-known stock professionals with successful track records in selecting stocks share some common characteristics including:

• Development of an inner conviction
• Profound belief in their own judgment
• Choosing to take a position others feel is insensible
• Willingness to take unpopular investing actions and have few followers