Hot Stock Market Tips

Posted on April 1, 2008
Filed Under Trading Tools |


Pssst, want a hot stock market tip? Here is the best stock market tip you will ever get…

Don’t listen to stock market tips!!!

This post is all about stock market tips and why you should avoid them like the plague. In fact, if you hear a good stock market tip plug your ears, whistle Dixie and walk away and you will save yourself a whole lot of emotional stress and money.

Think about it, if someone really had some insider information would they tell you? If they did and you made a trade based on that knowledge you could be guilty of insider trading and could end up in jail just like everyone’s favorite Domestic Diva (To be fair she went to jail for lying to a grand jury and not insider trading proper but you get my point).

Here are some of my favorite sources for hot stock market tips:

The Friend

How about that hot stock tip from a friend or acquaintance? Maybe your dentist or doctor tells you about some hot stock they are “playing” and you get excited. After all, they are professionals so they should know what they are talking about right?

Well, statistically speaking doctors are some of the worst investors/traders out there so keep that in mind when they tell you about some up and coming medical penny stock.

Be especially careful if they say something like, “This stock is going to be the next xyz”. You can be pretty sure the stock will be a dog if they hit you up with that.

The Cold Call

You get a call out of the blue from someone you never heard of talking about a hot stock that is going to _____ (fill in your own ending) and you need to get in right now.

Wow! Some big time broker called me up, I must be important! Well, you are something if you listen to them…

Stupid!!!

Most of these guys are working from a list and peddling worthless penny stocks to unsuspecting people. For some great insight watch the movie Boiler Room to see how it’s done.

The legitimate brokers are usually rookies that get assigned a desk, cold call list and phone and are let loose. The stock tips they offer are typically for issues that the brokerage firm has an inventory of and needs to lighten up on.

Speaking of brokers…

Have you ever seen a brokerage firm give many or even any sell signals on a stock? Nope. Normally they will say something like Hold or Watch or some other euphemistic term to soft peddle their weak opinions.

Magazines

Do you think that the editors of mainstream financial magazines (names withheld to protect myself from lawsuits) really know any more about the market than anyone else? I myself have been burned many times by these highly regarded magazines before I wised up.

Another thing about magazines and stock tips in general, everyone tells you what and when to buy but nobody tells you when to sell. I guess you just keep the stocks forever. Even Warren Buffet doesn’t do that ?

Stock Forums

These are rife with stock touts that talk up a stock or bad mouth it in order to try and manipulate the prices. Most shares have such high volumes that these guys really are little more than an annoyance but they can be very tenacious and love to dish out their opinions on a stock and get into arguments.

The best advice I can give is to stay away from individual stock discussions and instead focus on trading techniques that apply to any market.

I hope by now you have come to realize that any stock market tip is probably worthless. You need to think in terms of prices and not individual stocks if you want to be a systematic trader.

When I trade all I see are symbols and numbers. I could care less what the stock is or what the company does.

Nobody can predict the markets or tell you how a stock is going to do. The best we can hope for is to have a set of rules that have been statistically proven to give us an edge in the market and to follow those rules religiously.

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