In the late 1990s when the stock market was on fire and the Internet stock bubble was so big that it had sucked in almost every investor in the Bay Area. It was stupid to ignore them when everyone around you was becoming a millionaire (at least on paper). Those were the days when stock tips flourished!
While the bubble has burst and the amount of advice floating around has subsided, it’s still an important part of investing to understand which stock ideas to consider. Or in this case, which ones to avoid. The following tips should be avoided:-
[U][B]Don’t Take Stock Tips from Family Members.[/B][/U]
Just like you shouldn’t borrow money from friends and family, you also shouldn’t take their stock tips. Even if some of the advice is good, there will definitely advice that doesn’t pan out, or that flat out fails.
[B][U]Give Cold Callers the Cold Shoulder.[/U][/B]
There are places called boiler rooms that call individuals and solicit them to buy a particular investment. These places are filled with shady, but great salespeople that could sell ketchup popsicles to eskimos in white gloves.
[B][U]Avoid Stock Tips from Your Email.[/U][/B]
Another place that you’ll find unsolicited stock tips are in your email. Similar to cold callers, there are hundreds of thousands of email scammers that give penny stock tips via email. They will send an email to thousands of people to try to push up the price of the stock they are pushing.
[B][U]Avoid Acting on Insider Information.[/U][/B]
You may hear about stock tips from a friend or colleague that works inside a company. While their tip may or may not be a good one, it doesn’t matter because you can’t trade based on insider information. However, even if their tip is insider information, you should know that it still has a good chance of being wrong.
[B][U]Don’t Listen to Sector Related Stock Analysts.[/U][/B]
You may watch the experts on TV and listen to their stock tips. After all, that’s what stock analysts are paid to do, right? While these analysts may be very knowledgeable about the sector of companies they cover, that doesn’t mean that their stock advice is good.
[B][U]Don’t Follow the Popular Stocks.[/U][/B]
So called, following the herd, is not a good way to choose your stocks. Remember what happened during the dot com bubble? Everyone invested in Internet and related technology stocks. For a while, everyone was right and all the stocks soared, but in the end, everyone that followed the herd lost their money.
Market analysis is extremely important in this course of action. A wise decision is a must requirement in choosing shares as all kinds of investments is vital and can effect on the profit or loss.
Regards,
Ayush Prem