As the jungle of economic survival becomes increasingly thicker and harder to navigate, one might use the basic fundamentals of building a stable stock portfolio as a compass.

First it is important to understand what a stock is.

"Companies issue ownership of their company, so you essentially own a piece of the company if you hold stocks in it," said Louis Chan, a University finance professor.

Mark Thies, investment representative for the Edward Jones firm, uses some basic fundamentals of a balanced stock portfolio, "Rules of the Road."

The first rule is to have a plan.

"It's important to identify personal financial goals and to have a plan to get those goals accomplished," Thies said. "An important key is to start early."

Alex Ring, freshman in business, did just that. He has been studying stocks since he was 11 years old, bought his first stock of Home Depot at age 14 and trades stocks daily through a discount broker online.

Ring started a Finance Club in high school to teach others how to invest in stocks. Today he owns between 10 and 15 stocks and plans to average 14 to 15 percent return. This means that he intends to make 14 to 15 percent return on his trades that are not annualized, called real return. If he invests $1,000 in a stock, he would expect to make $150, or 15 percent, in one to three weeks, although that is not always the case.

The next rule is to not be blinded by taxes as a roadblock.

"When you sell a stock at a profit, you owe capital gain on that profit, let alone taxes collected on dividends," Chan said.

Investors receive two types of income: ordinary income and capital gains. Ordinary income includes dividends and interest you receive. A dividend is a payment made in the form of additional shares, rather than a cash payout. You have a capital gain when you sell a capital asset — any asset you hold as an investment, including stocks, bonds and real estate — for a profit.

With capital gains, you don't pay tax on a capital gain until you sell the asset. Normally you can choose whether to sell sooner or later, so you control the timing of your gain or loss. You generally don't have that kind of choice with ordinary income, such as interest and dividends. Capital gains are also taxed at special rates for investors with long-term capital gains, which are stocks held for at least a year and one day. Short-term capital gain is taxed at the same rates as ordinary income.

Thies recommends considering the quality of the investment rather than being blinded by taxes that may result from the investment.

One must always stick to quality and invest in companies with long term potential because it is time in the market, not timing the market, that counts.

"It is important to control trading because people can chase hot stocks and tips, like with the technology stocks of the early 1990s," Chan said. "Stocks should be held for more than one year at least."

Chan recommends mutual funds, not stocks, for younger students in early investing stages. A mutual fund is a professionally-run pool of money that enables a person to invest money and have professionals run the day-to-day business of their investments.

Another safety precaution is the fundamentals of diversification: "Owning stock from different industries enables each to weather the bad economy in a given industry," Ring said.

There are other types of diversification in addition to industry diversification.

"Buying stocks from foreign countries is beneficial because all countries' economies do not move up and down together," Chan said.

Another rule is to buy your stocks and keep them.

"You have to be willing to take risks and watch the progress of your stocks," Ring said.

Thies follows the rule that "your first loss is your best one" because it is easy to realize your mistake and later correct it. With that follows making decisions carefully and then later acting on those decisions.

The final "Rule of the Road" Thies uses is to review the plan.

"As your goals change, it is important to review your plan and use it as a map to stay on course."

LET'S MAKE THIS A SIDEBAR:

Keeping track of your stocks is simple and information is readily available. If you look at the Wall Street Journal, your stocks will be categorized by the exchange in which they trade: the New York Stock Exchange (NYSE), the NASDAQ or the American Stock Exchange (AMEX). The NYSE includes most of the large U.S. companies, the NASDAQ is mostly technology stock and AMEX is mostly smaller stock.

When reading the quotes, you want to search for your company by their ticker symbol, which is individual to each stock, or by an abbreviated name for the company, depending on the newspaper.

The first column you will look at will be the closing price, which is the last price at which a stock trades during a regular trading session, according to the U.S. Securities and Exchange Commission Web site. For many market centers, including the NYSE, the AMEX and the NASDAQ Stock Market, regular trading sessions run from 9:30 a.m. to 4 p.m. Eastern Time. The next column will be: +/- _ . __ . That is how it shows up in newspapers when you look at it. The + or - symbol will appear next to the closing price, depending on whether you gained or lost money that day. For example, if you own Ford (F), whose ticker is F, you would see the closing price in the first column. The next column will be the change for the day and how much the stock went up or down that day. If for that day it was +.75, it means that it was up 75 cents per share. The last column shows this number as a percentage.