There's no use diversifying into unknown companies just for the sake of diversity. A foolish diversity is the hobgoblin of small investors. That said, it isn't safe to own just one stock, because in spite of your best efforts, the one you choose might be the victim of unforeseen circumstances. In small portfolios, I'd be comfortable owning between three and ten stocks.

It would be wonderful if we could avoid the setbacks with timely exits, but nobody has figured out how to predict them.

Avoid hot stocks in hot industries.

Average investors can become experts in their own field and can pick winning stocks as effectively as Wall Street professionals by doing just a little research.

If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.

All the math you need in the stock market you get in the fourth grade.

As I look back on it now, it's obvious that studying history and philosophy was much better preparation for the stock market than, say, studying statistics.