Stockscores rules (from an email)
1. There Are No Blue Chips - once upon a time, the largest
companies
in the world could be trusted to grow and prosper, and investors could
count on a return on their investment. This year, Enron, the sixth
largest
company in the US, went bankrupt. General Electric, the largest company
in
the world at one time has lost half of its value from earlier in the
year,
Nortel, the largest company in Canada, is now about 80% lower than
where it
started 2001. Have no faith in established names.
2. Don't Consider Stocks with a Sentiment Stockscore of less than
60 -
this simple rule would have kept you out of the balance of the
downslide of
this years many disaster stocks. Take a look at 24 month charts for
companies like Yahoo (YHOO), Lucent (LU), AT&T (T) or Nortel (T.NT, NT)
for
evidence of this.
3. The Stock Market is Not Fair - access to information is not the
same for all investors; there is always someone who knows more than the
rest of us and they have an advantage. To be successful, you have to
use
the tools and methods of Stockscores.com to determine what the well
informed are doing in the market.
4. Buy and Hold is Old - most of the time, most stocks stumble
along
with the rest of the market. It is only during periods of significant
fundamental change that stocks can dramatically outperform the market.
To
beat the stock market, you have to play these stocks at these times,
which
tend to be quite short in term. A more active approach takes advantage
of
market volatility.
5. You Must Manage Risk by Limiting Losses - before you buy a
stock,
plan to lose. Plan your exit point and stick to it. You can not be
right on
every investment you make, but if you can limit losses when you are
wrong,
you can be successful over the longer term.
6. Don't Listen to the Media - the media, for the most part, is
reactionary. The stock market predicts the future economic reality.
That
means the media is usually one step behind. When the headlines are
about
how great things are, dance close to the exit door. When the media
talks of
gloom and doom, look for a dance partner.
7. The Bias of the Financial Industry Can Hurt You - so many
experts
have a vested interest in the stocks they recommend, whether it is
directly
or just loosely associated with their business. Less than 2% of analyst
recommendations told investors to sell particular stocks. Yet last
year,
most stocks went down. Trust only the message of the market.
8. Don't Hope - hoping that a stock will turn around, and finding
reasons to justify holding a loser will lead to pain. Hope clouds your
vision, and leads to denial, and denial turns a trader in to a long
term
investor.
9. Trust the Market - the Stockscores.com scoring system and
methodology is based on the idea that the market knows everything there
is
to know, and success only requires learning how to read what the market
is
telling us. If a stock is in a downtrend, there is something wrong. If
a
stock is showing optimism, the chances are good that it will go higher.
10. Nothing is More Important to Success that Discipline - humans
are
emotional, and emotion will lead to mistakes. To be successful, you
have be
as cold as a stone, and have the discipline to make the right decision,
not
the right feeling decision.
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