Rule #1  Analysts Recommendations
These analysts would appear to be doing the investment world a great service by giving ratings on different stocks.  In fact these analysts often have hidden agendas that the average investor is not aware of.  Ever notice how analysts issue buy recommendations when a stock is at its all time high and sell recommendations when stocks are at their all time low? 

Rule #2  Money Management
One of the important things to learn with investing is how to manage risk.  Anyone that has no respect for risk is on the road for complete financial disaster.  You often hear these great stories about the guy who turned a small amount of money into a million dollars but what you don't hear is that years down the road these same people are also often wiped out as a result of not respecting the risks that go with investing.  Learning how to pick investments that can appreciate in both good and bad times is key to successful investing.  

Rule # 3  P/E's Are Important
There is a good reason why there is a current P/E ratio on every stock quote.  Stocks always have to answer to earnings at some point.  Investing in low P/E stocks doesn't guarantee positive returns, it merely helps determine your risk/reward ratio.  All professional investors use P/E ratios as a primary deciding factor in determining which stocks they are going to invest in.  Even though you might see a stock that is currently growing at 30% a year, keep in mind that in slow growth times like a recession, it's almost impossible for companies to keep up with aggressive growth over the long haul.  As a rule, the higher P/E you pay for a stock the more you are speculating which increases your risk.  

Rule # 4  IPO's, OTC Stocks
Start investing in IPO's after they begin to trade and you will be able to count the days till you are done doing that!  IPO's can start trading up anywhere from 20% to 400% up on their first day of trading and go straight downhill from there until they bottom out.  About 75% of all IPO's are trading below their IPO price one year after trading.  

OTC or penny stocks defy all logic as they move up mostly on hype instead of actual net profits. 

There are 2 main ways OTC stocks move up rapidly. 

1.  A pump and dump tactic, in which a group of people front-load the stock, then issue a big newsletter, etc. in which they sell into the rally.  After the rally, the stock moves back down almost as fast as it went up.
 
2.  Massive PR campaigns which are used to bring awareness to an OTC stock.  These campaigns work great for a while but by the time the average investor sees the stock the money runs out as the stock start to head back downhill again.

Rule #5  Low Priced Stock Myths
Low priced stocks are not a better value than high priced stocks and they don't go up any faster than high priced stocks.  Even in the day of free information there is still a this feeling that if you buy a stock that is trading at $5 a share you are have more upside potential than a stock trading at $65 a share.  Even crazier is the feeling that if I have more shares I am better off then if I have only have a few shares.  Fact is that only the company's market cap that represents the total value of all shares is important when it comes to putting a value on a company.             

Rule #6  Margin Trading is a Fools Game
The key to successful investing is having available cash to chose the next best investing opportunity that comes along.  When you get into debt you begin to lose your options and get trapped into your original investments.  Remember that all stocks can crash and odds are if you are high in margin that you will soon have a margin call, which you could lose 75% of your money.  As a general rule, buying stock on margin is bad money management. 

Rule #7  Buying Stocks at Their 52wk High Myth
Even respectable people will tell you that it is logical that only stocks that hit their 52wk highs can hit their next 52wk highs and so on.  Also they say that most of the great companies are trading at their 52wk highs.  In fact that if you are losing money on a stock it's most likely that you bought the stock at the wrong time being when everybody wants it.  

Rule #8  Don't try to hit the home run on every pick
Everyone wants to be the one to have their portfolio shoot up 200% in a short amount of time.  Fact is that there is no way to achieve this without taking on severe risk.  Have you ever heard of the story "The Tortoise and the Hare"?  The rabbit has more speed, but the turtle has more determination, stamina and consistency. The rabbit may get a fast start, but the turtle wins the race.  

Rule #9  The Urge to Trade
Emotions work against you in investing and its very easy to want constant action.  The problem is that great picks don't come along daily.  Idle periods are a part of business.  You may force yourself you to find some stock to invest in that will go against you at the worst possible time.  You need to be emotionally clean and ready to take on a new investment rather than get caught in a deteriorating position.  As a rule, the more you trade, the more risk you take. 

Rule #10  All Stocks Can Crash
This is a hard lesson to learn for new investors that ride out a single stock only to see their favorite stock crash later on.  As we have seen with history that great stocks like Microsoft, Intel, Compaq and AT&T have all crashed recently.  While these stocks will likely hit their highs again sometime in the future, they just like any other stock is bound to crash sometime no matter how great the company is.