The Doctors' 7 Investment Principles

Physician's Money Digest, January15 2003, Volume 10, Issue 1

The stock market is bumpy. So what's the average physician-investor to do?According to most financial experts, the best thing to do is—nothing. The keyto making money in stocks is understanding their long-term nature andaccepting the good times and the bad. Steady your nerves with "The Doctors'7 Investment Principles."

1) Remain calm—Don't run with the crowd and jump in and out of the market.If you have a well-planned, well-positioned stock portfolio, history is onyour side. The record is clear—stocks outperform all other investment classesover the long term.

2) Concentrate on the company—If the underlying company maintains itsvalue and principles, don't let a market drop—big or small—scare you into selling.Remember Warren Buffett's advice: "If you aren't willing to hold a stock for10 years, don't even own it for 10 minutes."

3) Buy more—Market corrections or down periods are the best times to findbargains and add to your stock portfolio. When the all-but-certain reboundcomes, you will have fortified your investment.

4) Step up in class—Corrections or downturns also are a good time to shoparound for top-notch companies that prove they can weather the storm.Gravitate toward companies that grow in good times and bad.

5) Spread it around—If a market slump does nothing else to guide physician-investors,it underlines the critical need for portfolio diversification. Successfulphysician-investors spread out investment risk by holding a sensible balance ofgrowth and income assets.

6) Trust sound advice—If you have a financial advisor with whom you've builta satisfying relationship, pay heed to their guidance and counsel. A good moneyadvisor will always deliver a balanced mix of good and bad news.

7) Keep taxes in mind—Taxes may dissuade you from pulling out of a marketgone sour. If you sell or get out of the market altogether, you face capitalgains taxes on your profits. This holds true even with the new tax laws onstock investments.

Note:

Physician's Money Digest

Once a year the editors of reprint this story to reminddoctors of the vital need for developing and maintaining an investment plan.