Solin's Rule video

Solin’s Rule For Picking Stock “Winners”

Here’s my rule for picking stock “winners”:

Don’t try.

Don’t listen to anyone who says they can identify the next Facebook.

The odds are stacked against you.

Over the long term, a relatively small percentage of stocks (around 20%) account for almost all gains in the domestic market.

You have about a 40% chance of picking a “loser.”

The chance of a “big score” is about the same as the possibility of a huge loss.

There’s a better way.

Buy a low-cost index fund that tracks the S&P 500 index or the Russell 3000 index.

Historical annualized returns for these funds are around 10%.

That’s a “winning” strategy.

The next time your broker recommends you buy an individual stock, just say this:

I follow Solin’s Rule. I don’t want to try.

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