13 Things You Wish You'd Known in 2007

Companies (and their shareholders) are much better served when the company admits its mistakes, apologizes and tries to make amends. Promising to do better in the future never hurts either. Even when bad news hits a stock, a quick admission of error makes the pain less severe than it might have otherwise been.

These companies practiced this philosophy and spared their shareholders billions in losses:

• After a disastrous screw-up on New York's JFK tarmac, JetBlue's(JBLU Quote) CEO issued a very sincere mea culpa via YouTube. The company not only took responsibility for the problem, it outlined the changes it was making to avoid it in the future. JBLU shares suffered as oil raced toward $100, but it could have been much worse had the company not addressed the problem so directly.
• Mattel(MAT Quote) responded aggressively to the discovery of lead paint in children's toys manufactured in China. It proactively worked with the Consumer Product Safety Commission, took out full-page newspaper ads, set up 800 numbers and issued vouchers for replacement toys.
• After Apple dropped its price 33% on its new iPhone, recent purchasers of the $599 version yelped loudly. Apple offered a $100 Apple store gift certificate to ease the sting. Everyone was more or less happy.

While these examples are all in the consumer space, the lessons apply to other firms. The truth comes out eventually.

12. Never forget risk management: This applies to everyone who is involved in anything financial: investors, companies, even the Fed.

Consider what could possibly go wrong, and have a plan in place in the event that unlikely possibility comes to pass. If there is to be upside, then there must also be a corresponding and proportional downside.

For investors, that may be something as simple as using stop losses and being appropriately diversified.

For others, it means knowing what risk factors face their businesses: the price of oil, interest rates, a hurricane. You may not be able to control these things, but you can anticipate, prepare for, even hedge against all of them.

13. The trend is your friend: Despite the year's parade of horribles, this market cliché was proven true once again. The Dow, S&P 500 and Nasdaq are all higher this year, as their long-term trends have been tested but remain intact.

The exception, the Russell 2000, broke its trend earlier this year. That made trend traders abandon the small-cap index, which has since fallen even further. This confirms the corollary: "except for the bend at the end." As long as the index trend lines stay intact, investors can sleep easy. But once those trend lines break, well, then you better apply some of the earlier lessons (see numbers 2, 3, 4, 6, 7 and 12!).