Stock Tips - Why You Should Avoid Them

History of Stock Tips

Stock tips are as old as the market itself. I guarantee you during the tulip bubble during the 1600's there was some guy passing out leaflets in every market he could find pushing tulips. Stock tips are just as much a part of the market as stocks themselves. Honestly, where would we be without tips? What would stock analysts do all day, what would CNBC talk about? While these stock tips make for good entertainment, they can prove deadly to your portfolio.

Why Avoid Stock Tips

Looking at the stock market is much like assessing a person's beauty. You may see the future mother of your children, while someone else will see a toad. The market truly represents what you, the trader can see. If you see randomness, well guess what, the market is random. If you see structure, and have specific rules with profit targets, stops, etc., then you will succeed. But, once you take a stock tip, you are no longer looking at the market through your own eyes. You are now relying on the advice and information of another person.

What Are Stock Tips Really

Stock tips are code for "greed" and "fear". The average tipster is so bullish on their stock, that they can no longer think clearly. So, they are telling everyone within ears distance to buy the stock. Of course you have the fearful person, that goes on every message board, blasting the stock, because they themselves are carrying a large short position. These factors have absolutely nothing to do with your goals or dreams.

Worst Stock Tip of Them All

The worst stock tip of them all is from a trusted friend or professional. Unlike people motivated by fear or greed, these individuals actually have your best intentions at heart. They truly want to see you succeed in your trading endeavor, but unfortunately, what they believe may not be the answer for you. Often times you will find yourself believing in the person and what they are saying, not necessarily what the stock is telling you. This can and will prove to be a deadly combination.

What Tips Are Good

The only tips that are good for you are general market principles (i.e. the information on this site). It is better to get a general understanding of the workings of the market and not focus in on one person's idea of a good stock. This way you can develop your own strategies for analyzing the market and stocks. Remember, it is better for you to learn what makes a good stock, then to simply take someone else's stock tips blindly.

See You at the Top,

Stock tips are as old as the market itself. This article stresses the importance of traders developing their own strategies versus listening to the opinions of others.

Alton Hill