However, the key is that the company continues to make good profits, even in bad times, and that an extraordinary event is indeed extraordinary and not something that happens every quarter.

Think of stocks like this: if you bought the corner gas station, would you look to sell it the week after you own it? Most likely not because you've invested in it to see growth. The same is true with a company in which you own stock. It's the growth that you're buying, and growth doesn't happen in a week or a month, sometimes even in a year. It's a long-time horizon that investors have (traders have no time horizon except for the next few minutes ... make sure you understand the difference between a trader and an investor). So being patient is part of the winning formula. Warren Buffett, probably the best investor of all time, says his favorite holding period is forever.

2. Do you do your due diligence?
Do you like to solve puzzles? That's what finding a good stock is. You find the pieces (P/E ratio, Price To Sales ratio, Earnings growth, etc.) and then put them together to see how the picture looks. If it's a good one, you buy the stock. If some of the pieces are missing or weak, you don't.

But you have to dig below the headlines and into the data to make a good decision. If you buy stocks because you hear about them from a talking head or get a tip from a friend, you can't make money as an investor. You have to dig in and really know a stock if you're going to make good decisions about it; first whether to buy it, then when things go bad, whether to sell it.

3. Can you resist the crowd?
We're all social animals. We like to be with other people, at least most of us do. So when the market starts to rally, and everyone seems to be buying stocks, can you be objective and determine whether your stocks should be sold into a rally or held? Every rally will bring in investors sitting on the sidelines, ones that are afraid this is going to be the beginning of something really big and if they don't buy now, they'll miss out. Most of those investors will buy stocks that fade after the initial rally, lose faith in their enthusiasm, and then lose money by selling. Contrarian investors make the most money in the stock market because they buy when everyone else is selling and sell when everyone else is buying. It's hard to do, but ultimately very rewarding.

4. Can you keep your emotions out of it?
Emotions are probably the worst enemy of an investor. They cloud our judgment, pressuring us to make decisions that wouldn't normally be made if just the facts were used. For example, when there's panic in the market because of a terrorist attack or other terrible incident, most investors have the natural tendency to want to get out of all stocks and watch to see what happens. That's a natural, survival response. But it's not always the best one.

If a company you own sells medical devices or drugs or groceries, it won't be affected much if at all by those events. People still need those products. But the stocks of those companies will most likely go down with the rest of the market because most people will sell to just get out of the market. If you're able to be a contrarian (see above) and buy during these panics or sell into euphoria, you will make a great deal of money in the stock market.

5. Can you sell a stock you love?
This ties in with emotions. But it's more than that. It's very hard to find a great stock, maybe harder to sell one. That's because great stocks reward an investor for many years.

At some time, however, even great stocks turn mediocre, even bad, and they have to be sold. Think of a stock like Microsoft (NASDAQ: MSFT) that had such great growth for years. It's still a fine stock, but no one can make the argument that it's a growth stock anymore. While it pays a dividend with a yield of 2.14%, the stock price over the last 10 years has mostly been down or flat.

The best investors continually follow a stock and look to exit when their reasons for owning it are no longer valid. For Microsoft, most investors were on board for growth. When that trend stopped, the best investors sold and moved to another growth company. Just because a stock goes up is no reason to sell. In fact, good companies will continue to rise as sales and earnings increase. Rather, a stock that no longer meets your buying criteria is the only reason to sell. But it is the reason to sell.

These five simple questions will go a long way to help investors understand if they've got the right stuff to be winners in the stock market. It may be that you're not willing to devote the time or energy to picking and managing stocks. That's where a mutual fund would be of great help. But if you're going to be in the stock market buying stocks, you'd do well to understand these elements and incorporate them into any strategy you may have. They're definitely part of any successful investor's program.

Ted Allrich is the founder of The Online Investor, founder of Allrich Investment Management, LLC, as well as the author of the book Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.