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Wear sunscreen.

If I could offer you only one tip for 2012, sunscreen would be it. The long-term benefits of sunscreen have been proved by scientists, whereas the rest of my advice has no basis more reliable than my own meandering experience. I will dispense this advice now.

Enjoy the power and beauty of a well diversified portfolio. Oh, never mind. You will not understand the power and beauty of a well diversified portfolio until you are too old. But trust me, in 20 years, you'll look back at your portfolio and recall in a way you can't grasp now how much possibility lay before you and how fabulous it really was. You are not as bad as an investor as you imagine.

Don't worry about the dollar. Or worry, but know that worrying is as effective as trying to fix the economy by creating a Facebook account. The real weak currencies in 2012 are apt to be the ones that never crossed your worried mind, the kind that are served with sushi and sake.

Make one investment this year that scares you.

Short Microsoft (NASDAQ:MSFT).

Don't be reckless with other people's investment ideas. Don't put up with people who are reckless with yours.

Now that it's almost cheap enough, buy some First Solar (NASDAQ:FSLR), and then sell it to General Electric (NYSE:GE).

Be prepared to do the same thing with Cree (NASDAQ:CREE).

Don't waste your time tracking your performance. Sometimes you're ahead, sometimes you're behind. The race is long and, in the end, it's only with yourself.

Remember the bad investments you made. Forget the good ones. If you succeed in doing this, tell me how.

Keep your steady performers. Sell any shooting stars you still have from last year.

Buy Sina (NASDAQ:SINA) and wait for Baidu (NASDAQ:BIDU) or Tencent (OTCPK:TCEHY) to cut you a check.

Don't feel guilty if you don't know what you want to do with your portfolio. Most great investors didn't know at 25 what they wanted to do with their portfolio. Some of the most amazing investors, at 50 years old still don't know. More often than not the best investment decision you will make is the one that required you to do nothing at all.

Be overweight cash and prepared for some deflation. Value your liquidity. You'll regret it dearly when you don't have it.

Maybe you'll outperform, maybe you won't. Maybe you'll spot an Apple (NASDAQ:AAPL), maybe you won't. Maybe you'll find a Netflix (NASDAQ:NFLX), or maybe you'll get caught in a Netflix. Whatever you do, don't congratulate yourself too much, or berate yourself either. Your choices are half chance. So are everybody else's.

Enjoy your dividends. Get them any way you can. They are the only real return a stock will ever offer you. But understand that the spread between dividend yields and ten year Treasury yields is not much of a market indicator. During the 20 years this spread was consistently negative was also the best time to own stocks.

Read about human behavior, even if you have nowhere to do it but your bathroom.

Buy some physical gold, even if you expect it to fall. Hedging tail risk is not about generating returns. It is about having insurance. You don't want to have to collect, but you will sleep better at night if you have some.

Short copper until you start reading headlines regarding its collapse and how Chinese shadow financing was behind it.

Get to know your emerging markets. They have had a bad year and are now shifting more towards an equity friendly monetary mode.

Be nice to your US Treasuries. They're still a good place to hide, and most likely the best of a very bad western sovereign bunch.

Understand that investments mostly come and go, but with a precious few you should hold on.

Buy some Chinese stocks now that they are pricing in China's slowdown, but sell them before everyone thinks the next round of stimulus will save the day. Short commodities because they are not pricing in China's slow down, but cover before everyone starts predicting an era of indefinite deflation is here.

Enjoy the benefits of Web 2.0, but don't invest expecting those benefits to translate into easy stock returns.

Accept certain inalienable truths: Prices will rise. Politicians will philander. You, too, will get old. And when you do, you'll fantasize that when you were young, prices were reasonable, politicians were noble and investors respected Mr. Market.

Respect Mr. Market.

Don't expect anyone else to do your due diligence for you. Maybe you have a trust fund. Maybe you have a great hedge fund manager. But you never know when either one might run out.

Don't mess too much with your portfolio or by the time you're 40 you won't have one.

Be careful whose advice you buy, but be patient with those who supply it. Advice is a form of nostalgia. Dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it's worth.

But trust me on the sunscreen.

(This was largely a play on Mary Schmich's 1997 Chicago Tribune article, "Advice, Like Youth, Probably Wasted on the Young". Or what is commonly referred to as the Sunscreen Song.)

Source: 2012 Market Outlook: 'Wear Sunscreen'