Thinking that this will be the year you invest in individual stocks?

If so, you aren't alone--- that's why Ameritrade, e-Trade, MyDiscountBroker, and dozens of other e-brokers are growing. Unfortunately, putting together a portfolio of individual stocks takes more time and effort than picking a few mutual funds. More important, your new portfolio will probably have a lot more price movement than most mutual funds.

That means you'll need to be confident about your decisions.

  Here is a list of seven "resolutions"--- things a stock investor should promise to do.

•           Learn the difference between noise and information.   Many people                think they are being informed investors by watching TV investment                shows and other sources that purport to explain fast moving events.                While there can be interesting news items about an individual                stock or industry--- something you should know--- virtually all                discussions of what "the market" did on any particular day are                useless, the equivalent of statistical noise. It is a market of                stocks.

•           Learn where to gather important information.   Here, the world has                improved greatly. It wasn't so many years ago that you would go, hat                in hand, to your broker and ask for a Standard & Poors' sheet                describing a company. That was what was available. Today, we have an                abundance of sources that will provide daily news items on stocks in                our portfolio, analyst estimates of earnings and growth, insider                trading information, SEC filings, etc. You can get this information                directly from your e-broker--- witness the information provided by                Fidelity and Schwab--- or you can also get it from non-broker                sources like Microsoft MoneyCentral and Quicken.

•           Limit the number of issues in your portfolio. While academic research                will tell you that you can reduce the risk from individual stocks by                having as few as 15 issues in your portfolio, very few people can be                informed about 15 companies--- even with the tools we have today. I                suggest a portfolio of 5 to 10 stocks; with the number depending on                how much time you have to stay abreast of company news. If you really                feel it is important to have more than 5 or 10 stocks, have a portion                of the portfolio be "auto-pilot" stocks such as the "Dogs of the Dow."

•           Nibble at your stocks, don't wolf them down. While this may cause you                some remorse if a stock skyrockets, there's a good chance you'll have                an opportunity to buy more shares at a lower price at a later date.                If you don't have the stomach to buy more shares after a stock                declines, you need to rethink the original position--- or whether you                really want to be a stock investor.

•           Once you've picked the number of stocks in your portfolio, keep it that                way. Just as many people have chaotic mutual fund portfolios with                dozens of overlapping funds, many stock investors allow their                portfolios to get 'fat' with issues they know little or nothing about,                reasoning that 'it's just a small investment' so they don't have to be                as careful. The best way to run a portfolio is to make each stock you                hold do battle with a new contender, forcing the new contender to                displace a stock you already own.

•           Have the courage to measure your results. There are two important                ways to do this. The one you know about is how much your portfolio has                gone up or down in the preceding year. Don't throw out your worst                performers. Look carefully at what did well and what didn't. Use a                source like Morningstar to compare the performance of your portfolio                with funds that seem to have a similar purpose. The second way to                measure is more intimidating: compare the performance of what you sold                with the performance of what you bought. If the sales regularly do                better than the buys, you're making poor decisions.

•           Always remember that there is an easy, passive alternative. If, when                you measure your results, you regularly find that you are doing worse                than the managed or passive alternatives, swallow your pride and give                the job to someone else… or to an index. As I have written many times,                the stock market is one of the worlds' great sources of humility renewal.