Red Means Go

The other day I was reading an investment quote from a famous investor (forgot the name) in the stock market in the early 20th century. The quote went something like this: "If I find something good and nobody wants it, I buy some shares and put it away."

This has got to be the simplest and most truthful investment advice I have ever read. With this in mind, a simple investment rule to follow is: Red Means Go and Green Means Stay Away.

In other words, if a stock is not down (red), don´t buy it. If a stock is going up and there is alot momentum (Green), stay away. You want to buy shares in businesses when they are out of favor but you believe there is potential for future growth.  The hard part is staying disciplined enough to follow these simple rules.