3M's Run May Not Stick

This column was originally published on RealMoney on Oct. 26 at 8:32 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

As many of you know by now, we recently acquired two poodle puppies and my education with them mirrors what many of you are going through (or went through) with your trading education. The trick, I believe, is to know where you are on the learning curve, so you know best how to proceed.

Phase 1: You pick up one or two things and you think you know it all. That pretty much described many "traders" from 1998 through 2000.

Phase 2: You realize you don't know that much, so you start getting knowledge any way you can: books, the Internet, seminars, etc. Every time you learn something new, you think, "That's the answer!"

Phase 3: You still accumulate knowledge, but start to weigh one school of thought against another. No longer is everything you read assumed to be gospel. (That's where we are with our dogs, by the way.)

Phase 4: You still pick up things along the way, but have pretty much assimilated everything you need to be successful and have arrived at your own conclusions and eventually, philosophy. I'd like to think that's where I am with my trading.

I mention these phases because the market is far too tough now to have many people still in Phase 1. Instead, in my experience, many people tend to get stuck in Phase 2. Either they don't have time to continue their education, or they believe they've stumbled upon a "guru" who appears to have all the answers.

That's a shame, as getting stuck there usually leads to losses in the long run since adopting an approach that's successful doesn't necessarily mean that approach will be successful for you. As an example, a few years ago, there was a great industry of Warren Buffett followers. That industry shrunk a bit when those folks realized they couldn't absorb the great drawdowns the Oracle is able to withstand.

Therefore, the best thing you can do is realize where you are in your education and vow to keep learning until you have your own way of going about things. How to know? If you can go a week without any outside influence, and still trade successfully, you're probably there.

Today, charts for the Nasdaq Composite Index, 3M(MMM), Aldila(ALDA), American Standard(ASD), PepsiCo(PEP) and Gatx(GMT).

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Charts produced by TC2000, which is a registered trademark of Worden Brothers Inc.

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And that is the final word from George Washington University, where after a 15-year hiatus, I'm thinking of picking up squash again. (The sport, not the vegetable!)

I looked at my old racquet and found it not too dissimilar from the current equipment, which makes squash unlike a lot of other sports. I'm not sure my body, however, is quite as good as the 32-year-old version!

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Aldila to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.

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