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My 5 Rules for Successful Investing

Written By Brian Hicks

Posted November 28, 2011

“Brian, how far down do you think it’ll go? Where’s the bottom?!”

His voice quivered like a three-year-old who had just been scolded.

I calmed him down as best I could…

“Look, just get into cash or gold. It’s not too late.”

It was December 1, 2008, a day that saw the Dow close at 8,149, down 677 points from the open. To give you an idea just how bad it was, the Dow was sitting above 12,500 six months prior…

The guy on the other end of the phone was my money manager, and he was in a full-blown panic. It sounded like he was crying.

But it would turn out to be the greatest investment lesson I have ever learned.

You see, in 2006 I reached out to this money manager to run a small portion of my portfolio.

When I look back now, I realize I was just being lazy. I didn’t want to deal with the day-to-day requirements of constantly monitoring my investments, so I decided not to be responsible for them.

I figured I’d let somebody else — “the expert” — deal with the headache.

I couldn’t have been more wrong.

Here’s my story…

It was 2007, and Greg McCoach had just told me about a coming “derivatives bomb” that was in the tens of trillions of dollars.

I’m almost embarrassed to say that, at the time, I had no clue what credit default swaps were. But I quickly educated myself.

Greg even told me about one financial guru who had been getting a lot of attention by sounding the alarm. This same gentleman received an unexpected visit by a couple of Federal Government thugs who kindly told him it was in his best interest to “shut the f@$% up” about the derivatives problem.

I don’t know if it was true, but it caught my attention.

And then the market started to act funny…

In March 2008, Wall Street legend Bear Sterns was in a total collapse. To stem the bleeding, JP Morgan offered to buy Bear Sterns for just $2 a share.

This isn’t supposed to happen, I thought. My instincts persuaded me to get out of the market.

I called my money manager and told him to get me into cash. Naturally, he resisted.

“Brian, you’re making a mistake. You’re thinking irrationally. You’re making investment decisions on emotion… You’re panicking.”

This went on for three months.

Finally, I had enough. I told him if he didn’t get me 100% in cash, he was fired. This was in the summer of 2008, right before the financial crisis took down Lehman Brothers.

He was clueless — and I guarantee my position was not a unique one.

Multiply my story a few million times. Millions of baby boomers and retirees who’ve been brainwashed by Wall Street watched as their life savings circled the drain because professional money managers and stockbrokers persuaded them to stay invested.

After my experience, I came up with my Five Rules for Investing.

Note: My Rules don’t address specific sectors, because sectors that are in favor one decade won’t be the next. This is a template for investing in any market sector in any market environment.

  1. Protect the cash: That’s how fortunes are made.

    Depending on the market environment, there are times when I make five trades in a day. But there are also times when there’s no investment to make. I’ve gone days, weeks, even months without deploying investment capital…

    But when I’m ready, I have a nice big bankroll to use. So be patient.

  2. You need to take 100% control.

    As my above experience proves, you need to have 100% control of your financial destiny.

    If your broker or money manager dismisses your concerns, questions, or objections, fire him immediately.

  3. Liquidity.

    Make sure the investments you are in are liquid. If you get stuck in an investment that goes “no bid,” you could be in an investment (housing, for example) for months — even years — with no way out.

  4. Trust your instincts.

    If something doesn’t feel right, chances are it’s not.

    This is why investment newsletters like Wealth Daily exist. The editors at Wealth Daily do not get paid by pitching funds (like money managers) or stocks. We get paid by the success of our investment ideas.

    If you make money from our ideas, you stay with us. If you lose money, you leave us. Pure and simple.

    And finally…

  5. If you’re going to speculate, go where the boom is.

    This one really is simple.

    As you know, we’ve been following the boom in the Bakken oil shale and the boom in the Marcellus for years. In fact, we were one of the first investment newsletters to bring this to your attention.

    Companies heavily involved in the Bakken are making money hand over fist. And so are the shareholders of those respective companies.

Take Continental Resources, the biggest driller in the Bakken in North Dakota…

Continental’s stock is up about 8% for the year — and has outperformed the Dow year to date.


Or take Brigham Exploration, which announced a couple months ago that it was being acquired by Statoil.

It’s up more than 30% for the year.

If you follow these Five Rules, I guarantee you’ll be a more successful investor…

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Profitably yours,

Brian Hicks
Publisher, Wealth Daily