Tips or Research for Profitable Investing

None of us can know everything in the world of investing. So, subscribing to an alert service, following the advice of knowledgeable stock analysts, and doing a lot of fundamental analysis are all good ways to find profitable ways to invest in stocks. Now, how about tips? Your best friend tells you that XYZ Corp. is about to make a big move. What is better, tips or research for profitable investing? Remember that you cannot know everything and your friend has worked in the same market sector as XYZ Corp for all of his adult life. So, is it tips or research for profitable investing in this stock? In general it is OK when investing in stocks if you keep your eyes and ears open and listen to tips about stocks. What is of utmost importance is that you do your own independent research to confirm any tips that you hear. It does not have to be tips or research for profitable investing. It can be both.

How Do You Spot a Good Tip?

You are at a baseball game and two guys in the row behind you are talking about a great stock opportunity. One is giving the other a tip to buy the stock now before it goes up in price. The guy who is speaking is assured and seems knowledgeable. Is this a good tip? If you are interested check it out. Find out what the company does, what its cash flow looks like, and its profit to earnings ratio. Has there been a recent change in management? Is this a large company that is being followed by lots of analysts or a penny stock that no one knows anything about? If it is a penny stock and you have no way to check out what you have heard it is a bid tip. Ignore it and enjoy the baseball game. But, you are at the game with your good friend who works for a company that is XYZ Corp’s competitor. He gives you facts and figures to support his argument and suggests that you read a well reasoned report by a respected analyst. You can check out what he tells you and then decide for yourself. This is a good tip. So, it is not tips or research for profitable investing. For picking new winners and making profits it can be both.

Beware of Fear, Greed, and Despair

When considering following tips or research for profitable investing, your own state of mind makes a big difference. Maybe you have had a string of losses in the market. If the whole market has crashed taking your portfolio with it you may be in despair. At such times it is tempting to look for a miracle. Be careful. It is all too easy to convert losses in a bad market into an absolute disaster. There may valuable tips at such times and research always is useful. Either tips or research for profitable investing may end up with losses in a bad market. At such times the best tip may search for undervalued stocks that have been unjustly punished in a down market. There are often great deals to be found in blood in the streets investing.

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