Almost all investing heartbreak can be avoided if you stick to one simple rule of thumb: only invest in the stocks of companies that you understand. It is amazing how many people stray from this principle. I recently heard from a brand new income investor who told me that he has over 50% of his investable assets in Linn Energy (LNCO), and he was glad that he came across my blog so that he could learn about “defensive” investments.
No, no, no.
Look, I don’t own any Linn Energy, because there are a lot of things I don’t understand about the company, and there are some things I understand about the company but … Read the rest of this article!