Here are 4 keys we consistently rely on when picking the stocks we recommend in our newsletters and investment services. We believe they can help you succeed in stock market investing in all kinds of markets, including today’s volatile conditions.

1. Always ask yourself, “What can go wrong with this investment?” What upcoming event/technology/political trend could derail its profitability? In other words, don’t fall in love with a stock just because it has a great track record.
   
   When a company’s profits have been rising for years, its stock price will always be expensive in relation to its per-share profit. If something goes wrong and profit starts to erode or, worse, turns into a loss, the stock can go through a devastating drop. In stock market investing, too much enthusiasm for a favourite can lead investors to ignore its risks and price it as if those risks don’t exist.
2. Remember that high profits attract competition. This is related to rule #1. When a company is making a lot of money, you can be sure that other companies are making plans to enter its market with a competitive product that is slightly cheaper, or better, or more effectively marketed or whatever. Unless demand is exploding, this is bound to limit sales growth and depress profit margins.
   
   That’s why you need to diversify your portfolio between stocks that are already making big profits and those that seem headed for profit gains.

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3. Always try to apply your judgement, but don’t overrate it. If you spot a stock that seems to have great prospects, go ahead and buy it. Don’t wait for your broker or the cable news commentators to begin talking about it. If you have been successfully investing for a number of years, your judgement has value and you should listen to it. But don’t go overboard. After all, no matter how sure you are that a stock is a winner, you can still be wrong.
   
   There are no sure things in stock market investing, even when the market is up, and certainly not when it’s down. That’s why we always advise you to keep any one stock you buy within reasonable bounds (5% or less of your overall portfolio, say.)
4. Resist the temptation to copy prominent investors: Sometimes you’ll hear that a stock is a good buy because some prominent investor (a company, family or individual) has a stake in it.
   
   However, it’s important to remember that prominent investors don’t expect to profit in every investment they make. They do make mistakes. For that matter, sometimes they invest for strategic or political reasons, rather than profit.
   
   To profit by copying the decisions of prominent investors, you have to copy what they do with the bulk of their money, not with token amounts of it. That’s hard to do, since prominent investors often keep their best investments hidden until they want to sell.

If you’d like me to personally apply my time-tested approach to your investments, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.