One-Line Wisdom

This is a collection of one-line pieces of investment wisdom, with brief
explanations. Use and apply at your own risk or discretion. They are
not in any particular order.

Hang up on cold calls.

While it is theoretically possible that someone is going to offer
you the opportunity of a lifetime, it is more likely that it is
some sort of scam. Even if it is legitimate, the caller cannot
know your financial position, goals, risk tolerance, or any other
parameters which should be considered when selecting investments.
If you can't bear the thought of hanging up, ask for material to be
sent by mail.

Don't invest in anything you don't understand.

There were horror stories of people who had lost fortunes by being
short puts during the 87 crash. I imagine that they had no idea of
the risks they were taking. Also, all the complaints about penny
stocks, whether fraudulent or not, are partially a result of not
understanding the risks and mechanisms.

If it sounds too good to be true, it probably is [too good to be true].

Also stated as ``There ain't no such thing as a free lunch
(TANSTAAFL).'' Remember, every investment opportunity competes with
every other investment opportunity. If one seems wildly better
than the others, there are probably hidden risks or you don't
understand something.

If your only tool is a hammer, every problem looks like a nail.

Someone (possibly a financial planner) with a very limited
selection of products will naturally try to jam you into those
which s/he sells. These may be less suitable than other products
not carried.

Don't rush into an investment.

If someone tells you that the opportunity is closing, filling up
fast, or in any other way suggests a time pressure, be very leery.

Very low priced stocks require special treatment.

Risks are substantial, bid/asked spreads are large, prices are
volatile, and commissions are relatively high. You need a broker
who knows how to purchase these stocks and dicker for a good price.