Charles Smith's Rules

Invest in situations which you can understand

– Have clear idea as to why you think the stock should go up in price

– Must know what factors are relevant to your decision and which are irrelevant

Take the short loss

Don’t be afraid to make money: Ride your winners

– Should not be scared of winner

– As long as you think a stock is WORTH as much or more than current selling price, you should HOLD it

– Ask yourself “Is the stock worth what it is selling for?” – If YES then DON’T SELL

Use market orders

– If a stock should be sold, it should be sold. If a stock deserves to be bought, it deserves to be bought. A quarter of a point here or there will not change the situation

– Orders should follow decisions; the order should not be allowed to make the decision for you

One might think that:

• many BUY orders BELOW the market was a BULLISH sign since it indicates Support for the stock. In fact, there are orders to Buy the stock if it goes Down MAKES IT POSSIBLE for the stock to go Down.

• many SELL orders ABOVE the market was a BEARISH sign since it indicates a heavy Supply. The fact that there are orders to Sell the stock as it goes Up MAKES IT POSSIBLE for the stock to go Up.

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