[See 7 Great Dividend Funds.]
Cut your losses. Any investor who's done it knows that selling at a loss hurts. But the best investors know that limiting losses can be just as important as picking winners in the market. That's because investors can recover from small losses quickly, but digging out from a sudden loss of 25 percent or more can mean a small portfolio will take years to recover. Longtime investors like William O'Neil have long advocated selling stocks when losses hit 8 percent. Other experts advocate selling half of a position at a 5 percent loss, and bailing out completely when share prices dip 10 percent. Either way, the ability to fall out of love with a stock can be just as important as picking the right investment.