Beware of hyped stock advice

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If you’re new to investing, and you’re looking for information about investing online, I caution you to be aware that a lot of the information you get could be biased. In fact, much of what you read may be produced for the simple reason of getting you to buy the stock. The stock market sector is very bad for spam practices, and in particular sub-penny stocks are hyped relentlessly through email and website spam constantly. Don’t fall for it. How can you tell an analysis of a stock might be hyped? The language usually gives it away.

A stock is never “going up” according to a hypester. Instead it “explodes” or “skyrockets”. In fact, every word the hypester uses is an emotionally charged one, designed to get you to jump lock, stock, and barrel into your purchase. Why? Because human nature functions on some basic levels, and excitement is one that causes people to buy things. If you think that “the train is leaving the station”, you’re more likely to want to “jump on board”. Chances are the train isn’t running, let alone leaving the station

Calm down. Chances are real good you won’t miss the next stock explosion by being patient. Actually, chances are very good that a stock won’t explode in your face if you follow some common sense principles. Stock prices are about company’s performances. At every level, their story is told in numbers. Human language is not sufficient to explain the complex functioning of a multi-national company.  Hearing a phrase like $1.99 per share in earnings this quarter is a lot more comforting than hearing about a last chance opportunity to invest in a once in a lifetime stock before it leaves the station.

The first thing to learn for any beginning investor is to be wary of all information you get.  In fact, you need to be suspicious.  You should never want to buy a stock.  You have to eliminate all of the bad reasons for buying a stock, and then when the purchase is still compelling, you have yourself a winner.  Stick to the numbers, do your homework, and don’t be led astray by the latest marketing pitch.

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