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7 commandants for beinga dividend investor

1) For most investors in general, selling the expensive asset, and buying the cheap asset, seems like a logical strategy - EXCEPT WHEN YOU ACTUALLY TRY AND DO IT. This is not easy. Because most people are actually not wired to be selling what's expensive and going up, and buying what's cheap and going down .Also many investors "freeze up" or meltdown when their stocks are down or worse yet seek solace from people on a

2)It will be the best portfolio [with the highest return]. So typically if you have a chance to lover your average cost, you should do so .Read billytickets article on this forum titled high dividend yield and averaging down for more info

3) Because the direction of the stock price doesn't tell you anything at all except for the direction that day or that week or that month. It tells you nothing about the direction of the future.and it also doesn't tell you anything about the value of the business. Or the headwinds and tailwinds it may face.Key is buying the stock at the right price which is illustrated in billytickets book

4)So you need to understand that your stock will go down after you buy it, and it will go up after you sell it. On average over time. Predicting the absolute lows is impossible

5)But what you want it to do is go down immediately after you bought it, and be lower then. You don't want it to be lower three years, or five years, or ten years. If you understand this, then the strategy of being willing to lower your average cost [by buying more when a stock drops] is a great strategy.It seems logical, except when you actually do it. (Laughter) Then it's emotionally difficult to do. EMOTIONAL STABILITY IS PARAMOUNT to beinga GREAT INVESTOR.

6) My view, instead, is that the evidence is overwhelming that most people are too risk averse. And that therefore they should be taking a lot more risk than they feel like is right. Personally I don't agree with that statement. I think most peopel SUCK at analyzing risk. The people who bought financials this summer knowing that the subprime mess was around and REAL were remiss

The problem is that real risk and perceived risk are two different things. And that's where people get into trouble, because they perceive risk to be high when prices are low, and they perceive risk to be low when prices are high. That's the psychological problem that most people have. THis statement should be stamped on EVERY INVESTORS COMPUTER.

7)And the system was mechanical. There was no judgment involved. And as it turned out, as the guy that wrote the book pointed out, that after two months of trading, he was the only one of the 10 people that actually followed the system . THIS PROVES THAT DISCIPLINE and a GREAT FORMULA( with specific FILTERS and ENTRY points is CRUCIAL.