Ten Subordinate Rules and Other Suggestions

The following sections are included:Rule 1: “Your Investment in Common Stock Should Reflect the Sum of Bank Deposits Plus Bonds Plus Insurance Plus Vested Pension Assets That You Own.”Rule 2: “Invest in Different Industries.”Rule 3: “Rarely Buy Shares in the Company or the Industry for Which You Work (the Rule Does not Apply to Stock Options and Discount Purchases of Stock if There is no Restriction on the Sale of the Stock).”Rule 4: “Your Tax Bracket and Status Should Influence the Mix of Investments. Use Simple Obvious Tax Shelters, but Beware of Sophisticated Devious Tax Shelters.” Tax Exempt State and Local Bonds are an Example of an Obvious Tax Shelter for a High Tax Rate Individual.Rule 5: “The Old Adage, ‘Buy Low, Sell High,’ is Wrong. Rarely Sell a Stock Voluntarily Unless You Need Cash, a Tax Loss, or Your Tax Situation has Changed.” The Old Adage Should Read, “Buy Low and Hope the Stock Price Increases.”Rule 6: “Never Act on Advice (Tips) That Leads to Buying Without Your Checking on the Facts. If You are Adverse to Risk, You Might Listen to a Sell Tip, but Again the Recommendation is That You Check the Facts.”Rule 7: “Do Some Basic Financial Analysis Before Buying or Selling Individual Stocks.”Rule 8: “Preferred Stock Yielding Less than an Equally Risk Rated Bond is not a Good Investment for a High Tax Investor or a Low Tax Investor.”Rule 9: “Consider the Tax Consequences and the Fees Associated with Your Investment Strategy.”Rule 10: “Follow the Spirit of the First Nine Rules, not the Letter.”Modifications for a Non-Average InvestorInvestment DecisionsVery Short-Term InvestmentsTax ConsiderationsUncertaintyTransaction CostsExpertise RequiredIncreasing the RiskStrategies That Can Lead to Maximum Returns (and Maximum Losses)Inflation ProtectionTIPSExampleCorporate Inflation BondLong-Term Financial Planning and Setting GoalsFinancial PlanningSetting GoalsInvesting StrategiesFirst Line of DefenseBefore Investing in SecuritiesMultiple ChoiceLifestyle FundA Brief History of the Dow Jones Industrial AverageMy Favorite Book on InvestmentsSummaryDAMETQuestions