The Only Investing Rule That Matters

Forget everything you’ve ever learned about the markets. There’s only one investing rule you need to know right now—and it has nothing to do with what stocks to buy.

More on this idea in just a second…

First, I know you buy stocks for a variety of reasons.

You’ll buy shares because you think a company is cheap relative to its earnings. You buy a stock because the company is about to release a revolutionary new product. Or maybe you think it’s a great buyout candidate. Or your neighbor raves about its products. I could go on and on…

You’re using up all of your energy trying to figure out what to buy. And once you have the shares you want, you just sit there with a blank look on your face. You have no idea what to do next. When it comes to actually selling and booking a profit, you’re clueless. You leave it up to rumors, guesses, and knee-jerk economic prognostications.

As a quick exercise, let’s take a look at how that’s worked out over the past five years:

In 2009, the market was going to zero because of the banks. They were going to go bankrupt because they did not have enough reserves. Or maybe it was because commercial real estate prices were about to collapse, causing the banks to fail…

In 2010, it was Greece and the Euro that were supposed to do us in…

In 2011, it was Europe again. Finally, the debt ceiling crisis actually yanked the market lower (but it didn’t stick).

Toward the end of 2012, we had the Fiscal Cliff and tax increases that were going to cause a recession.

Now we’re more than halfway through 2013. We had the Cyprus bank debacle ($10 says you had completely forgotten about Cyprus until just now). Today, Syria and the Taper are supposed to do us in.

Now, you and I know that one day this bull market will end. But you also know that nearly everyone that is trying to predict the end of this bull market is going to fail.

That brings us to our rule…

The rule you need to follow while everyone is predicting Armageddon is this: Only price can tell you when to sell. Price is king. Your reasons for buying don’t matter. You could be a fundamental investor or a dart-thrower. I really don’t care. If you’re selling before you receive price signals that the bull run is over, you’re never going to maximize your gains. Period.


Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of The Rude Awakening Pro, The Seven Figure Formula and Profit Spy. Over the past decade, Greg has helped build the small-cap and technical research teams. His analysis has appeared in Forbes, Yahoo Finance, Bankrate, and countless other publications. Greg is a member of the CMT Association and holds the...

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