10 Lessons Learned in the Selloff

In times like these, it can be instructive to step back and look at the bigger picture. Events such as the recent market shellacking don't have to be all bad. For the Apprenticed Investor, there are some important lessons to be learned away from the experience.

What follows are the top 10 lessons you might have learned -- or at least may have been reminded of -- during the May 2006 selloff.

1) 'Cheap Stocks' Can Always Get Cheaper

With the expanding number of stocks making fresh 52-week lows, the temptation to buy on valuation alone is omnipresent. Don't give in! You wouldn't short a stock making 52-week highs for that reason alone -- so why buy a stock that's making 52-week lows?

As much as you may like eBay , Yahoo! and Amazon (AMZN Quote), they each made 52-week lows the week of May 15. That means, someone (perhaps with greater knowledge than you) was selling them heavily. Dell (DELL Quote) and Microsoft (MSFT Quote) made fresh lows the week before. ...