Diversify. Spread your assets more than you think you should, but only in areas which have produced successful gains in the past.

Pick successful, established mutual fund managers with simple techniques. Mutual funds provide you with necessary information and liquidity. Fund managers must be capable. If you can’t understand their management style, they probably can’t either.

Identify risks and choose an acceptable long term level. You will never know all the risks in any mutual fund. This is why diversification is so important. You CAN use both the beta and the standard deviation statistics to get a rough estimate of risk. Mutual funds will never behave precisely as predicted because the contents of the fund will change. For bonds, you must know credit quality and average maturity.

Watch out for asset size and taxes. Asset size becomes more critical as a fund invests in smaller stocks. Taxes, of course, are a vital consideration.

Be a mild contrarian. We cannot  “time” the market; however, we can be cautious about what is overvalued and more enthusiastic about what is cheap. “Mild” means we do this with just a portion of our money. We keep the rest invested for long term results. 

Weed the garden. This means you sell your losers and you keep your winners. Once you feel you have  identified a "dog", don’t wait for it to recover. Invest in something else that will give you the excellent management you need. That’s why you need to review your portfolio on a quarterly basis to evaluate and alter as necessary to meet changing long term goals.