Wall Street is the only marketplace where the merchandise gets more popular as it gets more expensive. That's because the "herd" mentality on Wall Street says that, if a stock is rising, it must be worth buying. Invariably, however, those in the "herd" end up getting trampled when the stock's promise is not realized. Those who have the courage to act on convictions that may run counter to Wall Street's "group think" can find the rewards substantial.

One reason to stick with your own conviction is that it's at least unbiased. You can't say the same for some of Wall Street analysts' views of companies. The role of the stock analyst on Wall Street has changed dramatically in recent years. The main role of an analyst, at many Firms, is no longer to assess the investment merit of companies; it's to bring in deals for the analyst's firm. If an analyst aggressively recommends a company's stock, the analyst's firm has a much better chance of doing underwriting and merger work for that firm. If you bad-mouth a stock, your firm may be shut out of lucrative advisory fees. As one market watcher puts it, on Wall Street, "independent research" is an oxymoron.

Need proof? In May, 1998, The Wall Street Journal reported that 66 percent of the nearly 6000 stocks tracked by First Call Corp., a Boston earnings- and estimate-tracking service, had "strong buy" or "buy" recommendations from analysts. Only 1 percent had "sell" recommendations.

Of course, you can be as wrong as the next guy on Wall Street. Don't be too stubborn to admit you made a mistake if your scenario of the future does not pan out. Still, investors should not always jump to the often-easy conclusion that a stock that declines is a stock that should be sold. If the reasons that you bought the stock in the first place still hold, have the courage to act on your conviction and buy more. If, on the other hand, your reasons for buying the stock are no longer valid, don't be too stubborn to admit it's time to move on.

Since knowing why you buy a stock in the first place is so important to future investment decisions, jot down your thoughts on each investment in a journal. This journal will serve as a handy reference over time, especially when deciding to sell a particular investment.