Success Key #1: Identify the Handful of Sectors that Are Growing Fastest.

If you want to outperform the market you have to invest in the right sectors.

Here's a study that drives home how important this is. The consulting firm Greenwich Associates tracked stock prices over 33 years. They found that an investor who bought the market averages at every bottom . and sold at every top . would have seen his $1,000 investment grow to $85,000.

But an investor who stayed invested during both bull and bear markets . but only in the top-performing industry sector . would have made $4.2 billion.

You read that right, it's $4.2 BILLION.

So how do you stay in the right sectors? All you have to do is look for those sectors that are currently showing the greatest rise in price and volume.

That's all there is to it! There are no complicated formulas . no obscure indicators . no "hidden secrets." All you do is look at the 192 different industry groups and rank them according to growth in price and volume.

Then, once you've identified the handful of sectors that are growing the fastest, you examine the underlying industry fundamentals. Those fundamentals will tell you whether the growth is for real or whether it's a fluke.

Success Tip #2: Go Beyond Number Crunching.

Most analysts look at stock investing as a world unto itself. They see stocks as "picks" or "touts."

Well, stocks are not just picks or touts - they're living, breathing businesses.

And that's the problem with conventional analysis. Most analysts, fund managers, and investment gurus are ill-equipped to analyze businesses . because they have NO real-world experience!

The typical investment advisor has never run a business . never managed a business for someone else . never had to develop a profitable product . never had to sell that product . never had to meet a production schedule . and never had to make a payroll.

So how in the world can you expect him to recognize well-run business for you to invest in?

The bottom line is statistics and numbers are important but the numbers in and of themselves are not enough to predict whether a stock will rise.

Success Tip #3: Know when to Hold and Know When to Fold

Many advisors will tell you that you shouldn't sell your stocks. "Don't let reversals discourage you," they say. "Hold onto your stocks for the long-term." "Choose good companies that you'll want to own for the next 10 or 20 years."

This would be very good advice in a perfect world. In a perfect world, we'd all pick some great stocks, hold them, and never give the matter a second thought.

Unfortunately, we don't live in a perfect world. We live in a dog-eat-dog world. A world that doesn't sit still. A world where today's leaders become tomorrow's laggards.

Example: From the 1950s to the 1980s, IBM was the model of what a good business should be. Then more nimble competitors arrived and IBM shares lost 77% of their value! And this happened at a time when the rest of the market was quadrupling!

Department stores were another great success story for much of America's history. But then Wal-Mart came alone and ate them for lunch. Even the mighty Sears Roebuck got clobbered. Its stock price has been languishing for years.

There are dozens of examples of once-great companies that took a nose-dive. But I think you see my point. Companies change. The world changes. New trends occur. And disruptive technologies sometimes make entire industries obsolete.

You have to be able to stay on top of these changes . and know when it's time to sell.

Success Key #4: Buy at a Discount

Imagine you had a little discount card that allowed you to buy stocks for up to 10% off. If you did, you'd actually be "locking in" a profit on those stocks the moment you bought them!

Of course, no such discount card exists. But believe it or not, there IS a way to buy stocks at a huge discount off their market value . 10% . 20% . even 30% or more!

The secret: Buy on dips.

Now, you're thinking: "Everybody knows that!" Yes, everybody does know that. But there's a big difference between knowing it and being able to do it successfully. Many investors buy a stock after it's gone down, only to see the price continue to go down!

Studies show that stocks near their 52-week lows usually continue to sink, while stocks near their 52-week highs usually continue to rise. So how do you successfully buy on dips? By using the following guidelines:

• Because many stocks are seasonal, buy on seasonal dips.
• Use downgrades by Wall Street firms as buying opportunities.
• Buy on bad earnings news when you know the reason behind it.
• When a merger takes place, the stock of the acquiring company goes down. But if it's an acquisition that makes sense, it will ultimately bring more to the bottom line.
• Buy during market corrections.

Success Key #5: Get Background Information on Every Stock You Buy

One theory of investing says that it's hard to get a leg up on other investors because the price of any given stock already reflects all known information about the stock.

Thus, good management is already "included" in the price; earnings are already "in" the price; company news reports are "in" the price.

Well . if that's true. and the share price already reflects all known information about the stock . then why not obtain information that is NOT known? In other words, why don't you do a little detective work?

Talk with some of the employees. Contact the sales department to see if they're hiring, Talk with the shipping department to see if they're busy. You'll be astonished at the amount of "unavailable" information you get . simply by asking for it!

This is the type of information you'll never find in a company profile, annual report, or Standard & Poors research report. And it's information that can give you a tremendous edge.