Stock Market Advice – Here’s Why It’s Free!

One of the most plentiful commodities in all of the world is stock market advice. It is readily available from friends and family. When your hairdresser or milkman finds out you invest in the market they will willingly provide you with free advice.

Stock market gurus appear frequently on the cable news channels and the network morning shows. They are fairly bursting with new stock tips. In this wonderful world of ours everyone has a ready supply of stock market advice.

This great abundance of free flowing stock advice is not a new phenomena. It seems to have sprang up almost as quickly as did the stock markets themselves.

Perhaps my favorite story of free stock market advice comes from Edwin LeFevre’s Reminiscences of a Stock Operator. As the story goes, two hapless fellows become angry at the man that keeps giving them bum stock tips. They have followed a couple of this tips and lost a great deal of money. In frustration the two compose a torrid telegraph message to tell the tipster off.

Just before they send the message, one of the fellows has second thoughts. He says something to the effect of, “Hold on, Jim. You’re not really going to send that message are you?”

To which Jim replies, “And why shouldn’t I?”

“Well, if you send that telegraph, he might get sore and never give us another tip!” the friend answers.

This amusing story illustrates the second part of the problem with stock market advice. Not only do people love to give advice on the stock market, they also love to receive a juicy morsel of stock market gossip.

It is just human nature. When you hear the latest rumor or the latest whisper about a certain stock, you feel like you are in on the inside story. These tips can fill your head with dreams of great fortune. Stock tips are very tempting to take seriously.

But in almost all instances, the only fairly priced stock market tips are the free ones. And even these can cause you to lose money you would not have ordinarily lost. Stock market tips are a very tempting form of stock market gossip.

They will undoubtedly be a part of the stock market for as long as we have stock markets. But they are really a foolish way of going about investing in the market. The next time you hear of a hot stock market tip, just smile and walk away. Your pocketbook will thank you later.