Should you buy because you know Microsoft sell Windows Vista, Office, or XBOX360? The answer is no. You should never buy because Microsoft sells Windows Vista, Office, or XBOX360. You must ask yourself will XBOX360 be a big seller? The problem is that Microsoft is so big, I don’t think XBOX360 is going to make much different in lifting the stock up. When the company is worth 266 billions were can it find growth to take the stock price up? The answer is nowhere. The larger the company the less moment the stock has.

Enron
The employees of Enron thought they know more than you because they work there, and the result is that they end up losing most of their life saving. I don’t care how much you know about the company you work for; you should never put all your eggs in only one company.

The common rule is that you don’t own more than 10 percent in one company. Should you deep sea fishing? Yup, you should because there is margin of safety. You should only do deep sea fishing only if you know the business model is still promising. How do you think Warren Buffet make so much money? If you bought Kmart now Sear Holding at 10 dollars then you probably would have made good profit since the stock are more than 100 dollars a share.

Your main risk is not in the bear market but in the bull market. If you bought Washington Mutual (WM) in the Bull Market at 49 dollars a share then you would have lost most of your money since the stock now is 10 a share in the bear market.

Final Thought
I bought Apple at 15 dollars a share in the bear market because I thought the iPod was going to be a big hit, and I was right. I made good profits from it. Was I gambling? Yes, I was gambling but the company doesn’t have large debts. I also like the company balance sheet.