From Peter Lynch: Keep track of every stock you own. Note any new developments and pay close attention to earnings. Stocks do well for a reason and do poorly for a reason. Make sure you know the reasons. Investigate ten companies and you’re likely to find one with bright prospects that aren’t reflected in the price. Investigate 50 and you’re likely to find 5. But nobody is forcing you to own any of them. If you like seven, buy seven. If you like three, buy three. If you like zero, buy zero. Pay attention to facts, not forecasts. Ask yourself: what will I make if I’m right, and what could I lose if I’m wrong? Look for a risk-reward ratio of three to one or better. Before you invest, check the balance sheet to see if the company is financially sound. Don’t buy options, and don’t invest on margin. With options, time works against you, and if you’re on margin, a drop in the market can wipe you out. When several insiders are buying the company’s stock at the same time, it’s a positive. E...
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