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It’s March and that means it’s time for the NCAA tournament, the gauntlet of games that will eventually crown a school the king of college basketball. I filled out my bracket before the games began, but I didn’t have high hopes, especially since I’m no basketball expert. However, after a few days of play I ranked at the top of my friends’ bracket pool and decently high on the nationwide ESPN.com competition as well. But I don’t apply my basketball team selection methods to the stock market because investing is a whole different ball game.

Don’t be tempted to hang onto a stock for old times’ sake. Find new stocks to buy.

The early bird gets the worm ... except in the stock market.

Two great building blocks for a sound growth portfolio: Loss limits and equal dollar positions. First, you must set loss limits based on the price at which you bought each position. When markets are challenging--as they are now--your sell discipline should kick in at a minimum of 15% below your buy price. The second risk rule is to use equal dollar positions to build your portfolio. The number of shares you own is totally irrelevant. If you are working on an aggressive portfolio, you should divide the amount of money you have allocated to that portfolio into 10 equal-dollar positions and buy just that amount of each stock.

Last week’s G-20 summit was a bigger success than anyone imagined. Among other items, the group agreed to increase the loans available to struggling countries to $1.1 trillion. That boost in funding is a prime example of why I think investors should be looking toward gold--and gold miners, in particular. We’re seeing unprecedented global spending, and I think a wave of inflation may be just off the horizon. Central banks around the world have been stirring together all the right ingredients for a big batch of inflation--and last week’s G-20 summit was just icing on the cake.

Last Thursday, in a financial story that you may have missed, Nasdaq OMX Group announced that it had created a new index. It’s called the Nasdaq OMX Government Relief Index and it is now trading under the symbol QGRI. The components of the index will be the companies that receive $1 billion or more under the Troubled Asset Relief Program (TARP) or any other government handout program. Creating and updating indexes like The Bailout Index (my term) is one way financial services companies make a living. But I think I’ll give The Bailout Index a pass

So with the Detroit auto show starting this week and running through January 25, I’ve been paying attention to what might be coming down the line. No surprise, there are lots of electric and hybrid concept cars on display, including the Chevy Volt. And yes, the Volt is still scheduled to go into production--at the end of 2010, about 23 months from now. That’s a long ways off, especially when you realize that a full two years have passed already since the car was first announced.

Shifting into academic/environment/energy mode, I recently read an article in The New York Times that claimed we’d save more fuel as a country if we stopped measuring miles-per-gallon and began measuring gallons per 10,000 miles. On the surface, it doesn’t seem to make sense, and I assume that’s because we’ve been brainwashed (conditioned) into thinking m.p.g. is the gold standard. So I opened up a spreadsheet and tried some scenarios, and here’s what I found. It’s absolutely true.

As my two daughters reconnected with old friends, it slowly became clear to me that many of these young people, mainly college-educated, are unemployed, and about this I have a few thoughts. One, times are tough. Two, many of these young adults have skills that are rather loosely defined. When the economy was booming, their liberal arts degrees might have been the ticket to many types of employment, but now their prospects are bleak. Three, people will now keep their jobs longer. In the recent boom years, job-hopping became fashionable. Now, just as the trading-up of houses is history, so is job-hopping. Four, vocational training is on the upswing, as people young and old looking to improve their employment prospects take classes to learn marketable skills.

Plummeting prices last year brought many stocks down 50% or more, so that their yields now look extraordinarily high. My database now shows 63 stocks with annual yields of 20% or more. But there’s something wrong with these stocks--business at every one of these high-yielding firms is faltering. The stocks’ plunges tell us that. And while the yields may look high today, they’re based on the past 12 months. If business shrinks, the dividend will shrink more. And if the business shrinks, the stock price may fall further, too. All in all, chasing these super-high yields is a dangerous game, suited only for professionals who can determine when the selling has been overdone and when the dividend is secure.

One of the hardest concepts for individual investors to grasp is the idea that the stock does not represent the company. In fact, the stock represents investors’ PERCEPTIONS of the company. If investors think a company’s future is bright, even though it is not yet a big success, they’ll pay a premium for their expectations--pushing the stock up in the process. Contrarily, if investors perceive that a company is becoming less successful, or simply growing less rapidly, its premium will shrink. In the worst cases, the stock will decline, even though the company is still growing!

As someone with more than a decade’s worth of experience writing about individual investing for Forbes and now for the Cabot Green Investor--and investing for myself for longer--I’m excited by the profit potential not only from the companies capitalizing on the current regulations, but also the ones that stand to benefit from the $115.9 billion of U.S. economic stimulus money I calculate is going toward Green projects, from electric vehicle conversion funding to watershed protection projects to modernizing the electrical grid.

Note from Cabot Wealth Advisory Editor Elyse Andrews: Are you looking for a way to really grow your money? How about the opportunity to turn $25,000 into $88,994? This knockout return is available from a rare security that combines stocks and bonds. Only eight of them exist. In today’s issue, Carla Pasternak, editor of StreetAuthority’s High-Yield Investing, explains what these securities are and how they work. The only question remaining is this: Why aren’t they juicing the returns in your portfolio?

Every so often, I compile the responses to the survey at the bottom of each issue of Cabot Wealth Advisory and from our welcome survey, which is sent to new subscribers. This week, it was time to read the results and there were some very interesting responses. Most responses were complimentary and some contained specific questions or requests for information, which is what I’m going to address today.

History in the making! Granted, it’s not the kind of history we’d all like to see, but the fact remains that the upheaval in the financial world during the past few days--in stocks, bonds, currencies, and, oh yeah, in the real world as well--is going in the history books. We’ll be reading about this stuff for years to come. As always, we want to keep you in gear with our latest thoughts, so I decided to jot down a few quick notes about what I see--call it a stream of consciousness.

Monday’s column, sparked by news of the Amethyst Initiative, the proposal by 129 college presidents to discuss lowering the drinking age, brought some great responses. I’ve reprinted many below (edited to save you time), and I thank you all for reading and taking the time to respond.

Forecasts were all gloom and doom for Black Friday, with the media predicting a huge pullback in consumer spending. But on Monday, numbers were released showing that shoppers had actually increased their spending over the same period last year. Many media outlets are still predicting less shopping in the weeks before the holidays and spending was way down leading up to Black Friday, meaning the boost may not do much to help ailing retailers.

How safe are the toys your kids are playing with this Christmas? After the widespread toy recalls of 2007, I assumed the toy industry would have straightened its act out. Unfortunately, that’s not the case. The Ecology Center, a Michigan nonprofit, tested 1,500 children’s toys this year for lead, cadmium, arsenic, PVC and other harmful chemicals.

Last week I ranted about overspending by American consumers and I received many interesting responses through email and the blog. I’ve included some of the best rants in today’s issue, but if you haven’t sent yours in, feel free to do so at any time. Enjoy!

If you follow a proven system (like cutting your losses), it doesn’t mean you’ll always be on the right side of things. But it does mean you’ll come out richer in the end. It’s usually the investors who don’t have a proven system that get so nervous and anxious about the market, the future, what their stocks might do, etc. Making money in the market is difficult, especially this year. So don’t feel silly or beat yourself up a poor trade or two--oftentimes, as in this case, it was just a bad market, or bad luck. Simple as that.