13 Things You Wish You'd Known in 2007

That The New York Times' Dealbook got suckered into printing this just shows you how pernicious these rumors are. The stock was as high as $123 the day of the rumor. Yesterday's closing price was $88.

Anyone who bought homebuilders or Bear Stearns stock on the basis of either of these rumors -- or nearly any other stock that had similar rumors floated throughout the year -- lost boatloads of money.

2. Buy sector strength (and avoid sector weakness): It's a truism of real estate -- it's better to own a lousy house in a great neighborhood than a great house in a lousy one. And the same is true for stock sectors. Buying mediocre companies in great sectors generated positive results, while great companies in poor sectors struggled.

The losers are obvious: The homebuilders, financials, monoline insurers and retailers all struggled this year. The winners? Anything related to agriculture, solar energy, oil servicing, industrials, software, exporters, infrastructure plays -- even asset-gatherers thrived. Stocks in these groups consistently showed up in the 52-week-high list.

Goldman Sachs(GS Quote) is a perfect example. Despite record revenue and earnings in 2007, the stock was up less than 15% in 2007. In 2006, on much weaker revenue and profits, shares climbed more than 50%. Great house, bad neighborhood.

3. Never blindly follow the "big money": Why? Because professionals make dumb mistakes, too. 2007 saw a number of surprise investments where so-called smart money bought big chunks of troubled companies -- Bank of America(BAC Quote) buying a chunk of Countrywide(CFC Quote) being Exhibit A. Many people chased the so-called smart money into these trades. Unfortunately, all of these trades have proven to be jumbo losers. If this keeps up, the "smart money" may need to start looking for a new nickname.