Image: Stock investor © Tom Grill, Corbis

With the Dow Jones Industrial Average ($INDU) hitting new highs, you might be tempted to jump back into stocks after years of hiding out -- or to buy stocks for the first time ever.

But after all the turmoil we've seen in recent years, you no doubt have some doubts. Should you trust this rally this time? Are you already too late because markets always crash? What stocks, if any, are safe to own?

Well, you're in luck. I've tapped into the wisdom of eight market elders with a collective 480 years of investing wisdom and the battle scars to prove it. These stock market wise guys have learned great lessons from their mistakes, and stuck with the game to post far more wins than losses lately.

Their key message: It's ok to jump in, even now at a high point, as long as you follow some basic rules. They also shared some of their favorite stocks right now, including IBM (IBM), Wells Fargo (WFC), Citigroup (C), Intel (INTC) and eight more.

My wise guys are at least 70, and started investing as early as 1928. So they've seen it all -- enough scams, crashes, and bull and bear markets to make you weep. They didn't let that keep them from making money, and neither should you.

Here are eight key lessons from these market wise guys.

Lesson No. 1: Jump in, now

Few market wise guys possess as much sagacity as Warren Buffett. To find the most relevant wisdom from the Oracle of Omaha, I consulted his latest letter to investors in his company, Berkshire Hathaway (BRK.B).

Michael Brush

Michael Brush

Buffett's key lesson: Sure there's lingering paranoia about stocks and the economy, but jump in anyway. Just follow a few caveats.

His reasoning: There have been reasons to worry about the U.S. economy for as long as there's been a country. But the economy has kept going, and stocks have followed. It's a big mistake to try to "dance in and out" of the market, says Buffett, who is 82. "American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance," he says.

Those caveats? There will always be pullbacks, so go in with a long-term view of, I'd say, at least 5-10 years, if not Buffett's favorite holding period, which is "forever." I personally would not be surprised at all to see a pullback now, following the strength since last fall, but you never know for sure.

When you buy, stick with high-quality companies with solid management, high profit margins and protective moats that keep competitors out -- all well-known Buffett measures.

Examples? Buffett added to big positions IBM and Wells Fargo last year. Lately Berkshire has been buying DaVita (DVA). As the second-largest dialysis provider in the world and part of a duopoly, DaVita has a protective moat and pricing power, two qualities Buffett likes. It also benefits from increasing obesity and the aging of the population. Both are linked to diabetes and create a rising need for dialysis.

Lesson No. 2: Go against the crowd

Aside from brazenly defying the odds by still hitting the office at the age of 107, value investor Irving Kahn is a natural maverick in another way. In his first trade, he bet against a copper stock during one of the biggest bull markets in history in 1928. He made money on the bet.

Most newbies prefer the perceived "safety" of joining the crowd. But as Kahn, his early mentor Ben Graham, and most value investors know very well, the big rewards come from being a contrarian. Just be prepared to stay calm, and consider buying more, when a contrarian play inevitably moves against you, advises Kahn.

True to form, Kahn Brothers Group, where Irving Kahn is chairman, owns many contrarian value plays. One is Citigroup. Kahn Brothers bought it below the current price, when the fears about the big banks were higher. But at $47, Citigroup still trades below book value, the theoretical liquidation value of a company. It just passed the government's "stress test" for financial strength and has announced plans to begin buying back stock.

Kahn also likes the New York Times (NYT), a true contrarian play, given the widespread negativity about newspapers. The New York Times has staunched the bleeding in print subscription sales, and its online subscription model holds potential. Plus it has a powerful brand, and a "hidden asset" in the form of an option to buy the half of the office building it leases in New York at about one fourth of its true value. Interestingly, Buffett has been snapping up newspapers across the country for the past 15 months.

Wise guy Lesson No. 3: Buy cheap stocks

It's best to bet on great companies which look cheap because of temporary problems that have alienated investors obsessed with near-term results, says value investing great Marty Whitman, 88, in his most recent letter to shareholders.

In the fourth quarter last year, chip makers Intel and Nvidia (NVDA) both fit the bill, so his fund initiated positions. Both stocks are cheap because of fears about weak PC sales and concerns about the economy.

But Intel is a leader in the chip space, and it sells chips used in servers where data center growth has been driving strong demand. It should benefit from a computer upgrade cycle driven by Windows 8 operating system, and sales of "ultra book" notebook computers. It pays at 4.2% dividend.

NVIDIA is a leader in graphics chips, where demand should stay strong because of ongoing growth in digital content, and computer-assisted design. It is also a play on mobile computing growth because its chips for these devices use the popular power-saving technology. It's financially solid, with $3.7 billion in net cash. 

Wise guy Lesson No. 4: Read, read and then read some more

Most investing greats are voracious readers. Ernest Monrad, manager of the Northeast Investors Fund (NTHEX) is no exception. Monrad's bond fund has beaten competitors by two percentage points a year, annualized, over the past 10 years, according to Morningstar. He attributes his success in part to avid reading.

Monrad, who is 82, reads everything from seven newspapers a day and Barron's to women's fashion magazines to keep up with trends. He mostly skips Wall Street analyst reports, though, because of the potential for bias. Stock analysts work for banks whose investment divisions often solicit business from the companies they cover.

Extensive reading helps you gain the confidence to avoid joining the crowds, a key to success in the market, he says.

In the contrarian spirit, Monrad likes Citigroup and Bank of America (BAC), which many investors still avoid because of their role in the credit meltdown. He thinks Citigroup will eventually earn $4-$5 per share, compared to the $2.40 it earned over the past 12 months. And Bank of America has the potential to earn $3-$4 per share compared to 25 cents a share in the past year. If he's right, both stocks should go much higher from current prices.

Wise guy Lesson No.5: Don't assume you're the only one who noticed a hot trend

"The number one lesson for a newbie is: Do not assume that what you know is not in the stock price," says Samuel Stewart Jr., who at 70 still manages the Wasatch World Innovators Fund (WAGTX). The fund has outperformed competitors by an annualized 8.6 percentage points over the past five years, according to Morningstar.

Besides spotting a hot trend, you also have to know when the market is getting it wrong by not yet pricing it in to a stock, says Stewart, who has been investing since the mid-1950s. This requires a lot of detective work.

What are most investors missing right now? That large-cap tech companies like IBM, EMC Corp. (EMC) and Google (GOOG) still have great growth prospects. You wouldn't think so, given the relatively low valuations on their stocks. "Today, what is amazingly cheap is big cap tech," says Stewart. (See my column on this theme, "8 dirt-cheap tech stocks.")

IBM and EMC will continue to benefit from the need of companies to analyze and store lots of data. As for Google, only a fraction of advertising has shifted online, and the search giant will benefit as more moves over.

Wise guy Lesson No. 6: Wall Street is full of bull

Wall Street supposedly cleaned up after all the scandals linked to its role as paid cheerleader during the tech bubble. "But there's still a lot of hype," cautions Don Hodges, who started his career in 1960 with Merrill Lynch before launching his own investment company, Hodges Capital Management, in 1989.

He's skeptical of the hype surrounding "cloud computing" companies -- which offer software and storage services from offsite servers -- like Salesforce.com (CRM). "I ignore it because I have never done well playing the latest fad on Wall Street," he says.

But it's not just Wall Street. Negative stories are regularly planted in the press by people betting against companies. The key takeaway: "You have to do your own research and thinking," he says.

A year ago, for example, he was buying airlines like Delta Air Lines (DAL) and United ContinentalHoldings (UAL), often overlooked by investors since airlines regularly lose money. But he liked positive trends in the sector like shrinking capacity, and the practice of charging extra for additional luggage or seat reservations. Both posted huge gains over the past year -- UAL is up more than 50%, DAL more than 70% -- and he thinks those move will continue.

As for the overall market, he doesn't think it's a mistake to buy, as the Dow hits new highs. Lots of money flowed out of stock mutual funds and into bond funds in the past several years. It will flow back as interest rates rise, which he foresees, which typically hurts bond prices.

Wise guy Lesson No. 7: Dividends pay

New investors, especially young ones, often ignore dividends in the search for hot growth stocks, which don't offer many payouts.

This is a big mistake. First, strong companies typically keep paying dividends even during market declines. So you keep making money. Dividends can also signal a company's stock will outperform, especially if the company has been raising dividends over a long period, says Thomas Cameron, 85.

Until late last year, Cameron was a portfolio manager at the Goldman Sachs Rising Dividend Growth Fund (GSRAX), which has bested competitors by three percentage points a year, annualized, over the past five years, says Morningstar. He still consults the fund.

Cameron likes companies with low debt that have been raising dividends for at least 10 years, by at least 10% a year, on average. He says he can't recommend stocks to us, but two big fund holdings which have been raising dividends a lot, for a long time, are IBM and McDonald's (MCD).

Wise guy Lesson No. 8: Be careful! The stock market is risky

John Bogle, the 83-year-old founder of Vanguard, knows about the damage the stock market can do. He was born into a wealthy family in 1929. But all his family's wealth was lost by money managers in the stock market carnage of the Great Depression and the hard years that followed.

Bogle tells me it was that best thing that ever happened to him, since it taught him a key lesson. "Ultimately, we all have to take responsibility for ourselves in the investment world," he says.

The experience also colored a key investing takeaway: You have to be very careful in the stock market. Bogle, for example, advises against using borrowed money, or margin, to invest. He also says you should avoid owning individual stocks (something other masters might disagree with, to be sure).

But Bogle says it's better to stay widely diversified with funds -- and use broad index funds, which happen to be a mainstay at Vanguard, rather than those that rely on stock-picking managers. Why? Mainly because it's tough to predict when an individual fund manager will ever outperform, if at all.

Click here to become a fan of MSN Money on Facebook

Next, be prepared for pullbacks, so you don't get shaken out. Too many investors sell out on drops and miss the upswings that inevitably follow, a losing proposition long term.

So when pullbacks happen, don't peek at your portfolio, because that will make you emotional, a big problem in investing. "Our emotions lead us to do exactly the opposite of what we should be doing," he says.

Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.