Tom Winnifrith is the founder and editor of www.t1ps.com, a web site which specialises in undervalued growth stocks. As a financial journalist he worked at Investors Chronicle , the Evening Standard , and AFX News. He also presented the award-winning Channel 4 series 'Show Me the Money' and is a contributing editor at Shares Magazine.
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If you don't want to own a share for ten years don't buy it for ten minutes.
In other words there is no such thing as a 'trading buy' of what is fundamentally a bad investment - who says that you can call the bottom any better than the next man?
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Remember that investing is a marathon not a sprint.
90% of day traders lose all their capital. If you buy a share you should be prepared to own it for 5 years.
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Never back bad management.
If a manager has failed once - or is unproven - why trust him with your money? Only back those with a proven record of creating and adding to shareholder value.
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Don't confuse investment with gambling.
Putting your money into biotech or unproven technology is not investment, it is punting. There is no need to gamble when you can invest in companies with sound fundamentals.
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If you do not understand what a company does, or how it constructs its accounts or generates revenue, don't invest in it.
The company is being opaque for a reason.
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Let the trend be your friend.
If a share price is moving steadily against you, do not view this as an automatic trigger to sell. But find out why it is moving - shares do not move for no reason. And be prepared to admit that circumstances have changed and that you would be making an error to hang on, even if it means booking a loss.
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Do not confuse a low price with a cheap price.
It is often better to buy a stock on a year high than on a year low. And if you are sitting on a large paper loss but no longer believe in that company, book that loss and move your remaining funds onto a faster moving train.
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Cash is king.
If a company is loss-making and you cannot see a clear path to it becoming self-funding, steer well clear. If it is profitable but fails to convert a decent portion of those profits into cash, you can do better.
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If it sounds too good to be true, it is too good to be true.
If a share yields 15%, that means that the dividend will be cut. If a & pound ;20 million company tells you that it is sitting on a billion dollar product, it is lying. The market is rarely THAT wrong.
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If you are wondering when to bank a profit, wait until all the brokers say buy and the stock is tipped in the Sunday Newspapers.
It can be promoted no more and it is time to get out.
