Take Stock Market Tips With A Grain Of Salt

Have you ever had a friend tell you that he heard about a stock that is going to double or triple in the near future? Have you ever received a news letter from a research service that has discovered an “incredible” opportunity with a little known company that is about to become a much bigger and much more profitable company? Beware of these types of stock tips. While some may actually work out, the vast majority of free and unsolicited advice is not worth your time.

If you do not want to get burned by a so-called hot stock tip, only consider investing after you have done some independent research on your own. A company cannot legally do anything in secret. It must divulge all material facts in relation to the potential performance of its stock. While an insider may know that the company is working on a new project that is going to be big, he or she probably is not privy to any undisclosed information. Don’t let greed get in the way of common sense.

People giving tips usually have invested in the stock themselves and want to stir up interest in that security. Their intentions may be to help a friend, but then again, only you are risking your money.

As sad as it may be to say, never trust anyone when it comes to investing your money. All you have to do is look at the billions of dollars Bernie Madoff lost for his trusting clients and you will realize that greed can be a powerful driving force for anyone offering advice on financial investments. You certainly can listen to the advice of brokers and other financial professionals, but ultimately, you must decide where and when your money should be invested.

A few solid principals will help you become a smarter investor and avoid falling for those dime-a-dozen stock tips that seem to be everywhere. Always research a stock before deciding to invest. Watch the general trend of the market. Do not try to outsmart the market. In a Bull market, prices rise and it is easy to pick a winning stock. Conversely, trying to pick a standout company in a Bear market is extremely difficult. Smart investors will sit out a Bear market or invest in very conservative securities.

Diversify your portfolio and always have a portion in cash available to invest if the right opportunity comes along. Most of all, know what you are investing in and make sure it meets your particular financial situation.