Investors are always looking for opportunities, and some folks are especially interested in good investment tips in the form of stock tips. Here we cover how to tell good tips from bad; and then I’ll give you what I consider to be some good investment tips for 2014, 2015 and beyond.
Let me start with an example of how so-called good investment tips or stock tips were sometimes peddled to average investors in years past. The stock broker calls a client (Jack) with exciting news about a cheap stock with “great prospects” and sells him 500 shares at $10 a share. The stock falls to $5 two months later and the broker calls Jack back. “If it was a good investment at $10 it’s a great buy now!” he says. Jack buys 1000 more shares and the broker makes another fat commission. At $2 the broker calls again, sells Jack 2000 more shares, and again earns a juicy commission.
IF Jack gets lucky and the stock turns around, the broker has found an easy mark for any good investment tips he wants to peddle in the future. If not he made some good commissions. Stock tips that are SOLD to you as great opportunities are rarely good investment tips.
In 1999 the stock market was on fire with penny stocks soaring to $50, $100 a share for new hi-tech companies with NO earnings history. Stock tips were a dime a dozen. Good investment tips were few and far between. By the end of the two-year bear market that started in early 2000, all but a handful of these tech stocks were again penny stocks or worthless. In 2014 new tech companies were again the rage. Could 2014, 2015 and beyond be a repeat performance?
Markets tend to go to extremes before they correct. Stock tips tend to proliferate at market tops. Exciting new companies (especially in hi-tech) are too often big on hype and small in the substance department. Don’t let greed dominate your emotions. If you are an average investor, don’t expect someone to actually give you good investment tips. The truth of the matter is that truly good tips like stock tips involve information not available to the public. That makes them illegal.
Good stock tips are explained to you – not sold to you. With that in mind, let’s look at 2014, 2015 and beyond. This last bull market in stocks began in early 2009, and in early 2014 it was five years old. It has been called the market that few people loved; even though it went up five years in a row. Many average investors missed out on most of this good ride because the financial crisis of 2008 scared the daylights out of them. Now, unfortunately, they are looking for good investment tips in order to play “catch up”.
After more than a five year run, this is not the time to play catch up. In 2014, neither the unemployment rate nor economic growth could be called inspiring. One of the few good investment tips that make good sense to me: don’t chase the stock market. If you missed the bull market, wait for the next one. Avoid stock tips.
If you are heavily invested in stocks, don’t be afraid to take profits. Sooner or later, whether it be in 2014, 2015 or beyond a market correction is coming. One of the few good investment tips that work for the long term is to keep your portfolio balanced across the asset classes. Stock market trends change, and stock tips rarely pay off in a bad stock market.
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