Why You Should Never Listen To Hot Stock Tips PDF Print E-mail
Written by Shaun Rosenberg   
Tuesday, 29 June 2010 21:26
Have you ever heard hot stock tips and then acted on it only to find that it was wrong and you still ended up losing money? It all seems very exciting at the time, like you know a secret that will make you extremely rich.
by ShaunRosenberg


Have you ever heard hot stock tips and then acted on it only to find that it was wrong and you still ended up losing money? It all seems very exciting at the time, like you know a secret that will make you extremely rich.

However there is one big problem with this. The majority of stock tips are not actually worth investing into, or at least not the ticket to financial freedom. Here are 4 reasons to forget about trading hot stock tips.

1. Most People Don't Know What They Are Talking About

I've heard a ton of people give off a ton of tips and a lot of them are just misguided rumors and misinformation. I've heard hype about some amazing company that is changing the world and has been making new highs and has just been a gravy train for all of their investors. Yet when I pull up the stock chart I see it underperforming the market or even going down. Sometimes I wonder where these rumors start in the first place.

2. Its Only Part of the Equation

You may actually come across somebody that knows what they are talking about and is actually giving you good information. But even so, they are only givng you part of the equation. You are only seeing part of the picture when all you have is a strong stock.

Successful traders and investors have a plan, when to get out and how to handle different types of situations. If you just know what they are buying you are missing 90% of the equation. Anyone can pick a stock that looks good, not everyone can manage their risk and stay profitable over the long term.

3. Pump And Dump Schemes

You'd be surprised at some of the widely accepted financial "gurus" who take part in pump and dump schemes. These are schemes to falsely hype up a company to get more buyers and manipulate the price of the stock for their own advantage. Stay away from this.

4. It May Be Illegal

If somebody comes to you with insider information you may be the new Martha Stewart. It is illegal to know insider information and act on it. Is making extra money really worth risking your freedom for?

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

For more information and tips about the stock market visit Shaun's site about the Stock Market Basics Free reprint avaialable from: Why You Should Never Listen To Hot Stock Tips.