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I've considered investment advice from instructors, investors of varying experience, veteran Fools and professionals. I've studied the rules, formulas and tenets of strategies and methodologies presented in seminars and on related discussion boards, selectively accepting and rejecting parts of each. Gradually I've formulated my own investment guidelines, coming to some conclusions embraced neither by those entirely "Foolish" or "Wise", to use TMF's terms.

Having been a leader (or as I prefer to call it "learning facilitator") for seminars on Rule Breakers, Rule Makers, Biotechs and Mutual Funds, I have reached my own conclusions. These definitely could not be classified as "Foolish", although they incorporate much of what I learned from instructors and participants in TMF Seminars. Without the benefit of the positive and negative experiences shared by hundreds of investors on my seminar teams and other discussion boards, it probably would have taken me many years to learn enough to formulate these guidelines.


*1* Remember that no investment strategy is foolproof. All, whether based on MI (Mechanical Investing), professional advice, past success, experience or personal preference, are flawed. The Market is powered by people and events, neither entirely predictable.

*2* Never substitute an investment strategy for true Due Diligence (common sense applied to research with a healthy dose of skepticism).

I said a few months ago, "Watching what is happening to companies considered "sure winners" when we took those seminars, I am more convinced than ever of the absolute necessity of thorough and continual DD (Due Diligence). (Even if you are familiar with the term "due diligence", it is interesting and instructive to read this legal definition:

*3* Base your belief in a company on solid research, realistic appraisal and scrutiny of all aspects of the company, its product(s), it's mission statement, its management and its competition.

I am in no position to know whether I should believe in a company or not until I have researched it to the best of my ability by examining and questioning every aspect of its vision, leadership, financial backing and viability, potential for growth, strategic alliances and sustainable advantage. Not coincidentally, those are all basically Rule Breaker criteria we were taught to use during that first seminar.

Before you buy into a company's hype, take time to examine the management. I gave some guidelines to follow in "Evaluating the CEO" ( In the cases of Lernout and Hauspie and Sunbeam (See Part 1), investors like me could have avoided substantial losses by tracing employment histories of the CEO's, accessible to anyone.

You should indeed consider adding to your portfolio companies such as American Superconductor with great potential that meet your criteria, IF you can afford to and are willing to do without that money for years and/or risk losing it. But first do your homework. As I told my Quest Seminar team, "No matter how fantastic something sounds, if I don't really believe in it, I won't put my money into it!"

*4* Be patient and diligent enough to buy and sell wisely on dips and peaks. You can afford to improve your position significantly without risking essential income if you are continually vigilant.

*5* When you see warning signs, don't ignore them. Seek answers whenever a company action defies logic, appears suspect or requires clarification. Where there is smoke, there could very well be fire.

*6* Keep current on the latest news, developments, changes within and alliances of the company. Sign up to receive the company's latest press releases, and try to gauge the Market's reaction to them in advance.

*7* Learn from and with others with a vested interest in the company, including those in seminars and on other discussion boards. But always be aware that their motivation could be quite different from yours.

Managing your own financial investments requires time, diligence and vigilance. That's why most investors are willing to pay someone to do it for them. But even if you find someone you can trust with the management of your portfolio(s), you should be aware of what is happening to the companies your future is riding on.

These guidelines are my own. They may not be applicable to you. I'm certainly no investment veteran, and my conclusions may change as I gain more experience. But maybe by sharing what I have concluded from my studies thus far, I will encourage some of you to examine your own philosophy and to formulate your own guidelines.

We can all learn from each other. As the July 2 Wall Street Journal article noted, " Motley Fool, of course, starts out with a big advantage -- the devotion of followers -- a bond so strong that it even keeps defectors coming back." That bond is forged by novices and veteran posters who share opinions, insight and expertise on TMF discussion boards such as this one.

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