The Rule after this one is about investing in the stock market. But before you go there, I should just point out that the next Rule may not apply to you at all. You might be better off skipping it altogether. If you don’t really, truly, know what you’re doing, you shouldn’t be playing the stock market. Basically this Rule is about whether or not you should read the next Rule.

It’s all very well saying that no one should invest in the stock market unless they know what they’re doing. How on earth can you do it for the first time then? Isn’t it like having a baby or sky-diving – you just have to learn as you do it? Well, yes and no. You see there are people who know what they are doing, and I guess they weren’t born knowing what to do, so it must be possible to learn before doing so you are as prepared as possible.

So, you want to learn about stocks and shares. But how are you going to do it without getting your fingers burnt? It’s actually very easy. Of course, you can do all the usual things like read the financial pages, talk to people who know more about it than you, ask advice, watch relevant TV programmes, buy books on the subject. Go ahead – you’ll find all these things invaluable. But even so, how can you be completely certain you’ve really understood everything you’ve read and heard and learnt?

Dummy runs, that’s how. Decide exactly where you’re going to put your money...and then don’t do it. Watch the markets. See what happens to your imaginary investments. Track their progress. Decide when to sell – and then see what happens to the price.

Write all this down – it’s far too easy to tell yourself you predicted something when actually you merely noted the possibility of it happening but weren’t sure if it would. Note down what you buy and when you sell and what you predict and how much money your initial imaginary investment would have gained (or lost) you.

Do this a lot. Not just one dummy run but plenty. Follow lots of companies, and keep doing it for months or years. Calculate your hit rate, your losses, your accuracy. And then, when your notes can prove on paper that you really do know what you’re doing – that’s when you can start investing for real. And even so, keep it small to begin with. It’s not the same when you’re ‘playing’ with real money and you may unconsciously modify your strategies, so carry on keeping those notes and records and don’t let yourself get carried away.