5 Basic Investment Rules to Avoid Pain

There is never just ONE dividend cut

We’ll try to round up some scary things in the market for our column in two weeks, just in time for Halloween. In the interim, let’s go back to some more basic investment rules and guidelines that all investors should pay attention to.

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There is never just ONE dividend cut

When a company’s fortunes change enough to require a cut in the dividend, the board of directors — almost always — makes the first cut smaller than it should be. They want to be positive, they do not want to sound an alarm, they “hope” for a recovery. But the best course of action is typically a large painful dividend cut, or elimination. Don’t get fooled by a small cut — there is likely more cuts on the way. If you need to sell a stock for any reason, and are deciding which one to let go, sell the one that cut its dividend first.

Read the full article at: business.financialpost.com