Don't pick (all of) your own stocks. You won't hear it on CNBC, but stock picking isn't for everyone. For investors who aren't willing to spend a good amount of time scouring stock charts or company filings, it's best to treat individual stocks like any other exotic part of your portfolio: They're fine to own in moderate amounts. Experts say a good rule of thumb for part-time investors is to keep less than 10 percent of your total portfolio in individual names, with the rest of your equity exposure in low-cost index or actively managed mutual funds. If you aren't willing to invest the time in digging deep into a company or industry, leave the stock picking to the pros. If you're dead-set on owning individual stocks as longer-term holdings, financial advisers say it's not a bad idea to play it safe by sticking with large, well-known global companies that pay a decent dividend along the way. Rimel says companies like Intel (with its 3.2 percent dividend) fit that profile. "They're very important to keep you ahead of taxes and inflation," he says.
[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.