Some rules to help you make money with stocks

The Ticker

May 31, 2000|By JULIUS WESTHEIMER

Are you often swayed by the crowd when investing in the stock market?

"Objectivity is a tender, fragile reed in the face of prevailing Wall Street winds," says the Hulbert Financial Digest, "and to keep from being swept away, determine your `exit strategy' before buying any stock.

"Write down your strategy - at what price you will sell a stock. This is to be sure you won't change your mind later when you might be tempted to second-guess it.

"Be zealously disciplined in following your exit strategy, no matter how attached to it you have become."

The article advises investors to be contrarians, adding, "at the exact bottom of the 1973-'74 bear market, with the average stock down over half and the average P/E ratio at seven times earnings, bullish advisers were a rare breed and hard to find. The majority is often wrong, especially at market turning points."

TAX TIP: "Using an IRA to fund gifts is better than leaving the gift subject to estate taxes," says Ed Slott, CPA. "The reason is that the gift tax is much less costly."

MONEY MATTERS: "What the Fed is executing is a `controlled burn,' a preventive measure to forestall worse inflation but not cause a recession." (Yankee Prognostics)

"Long-term interest rates have risen to the point where long-term borrowers would, considering the Fed's aggressive policies, prefer to borrow short rather than lock in prevailing long rates." (Safian's Strategy Report)

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