I continue on with a series on personal finance rules inspired by this post over at The Simple Dollar. The first three parts in this series were: Keep It Simple Stupid, Spend Less Than You Earn, and Pay Per Hour Worked in case you missed them.
Today, some good advice from The Simple Dollar, which is to ignore professional stock pickers. You know, the ones you see on TV (Jim Cramer at Mad Money) and all over the print media world giving their “inside information” about which stocks are going to be hot for the coming year.
Here are my top 3 reasons for why you should ignore professional stock pickers:
1. It’s too late. Once it’s all over the news, the time in no longer prime because everyone and their uncle has gotten in, forcing the stock price up and it’s no longer the ultimate pick, that it once (or ever?!) was.
2. Interests are conflicted. Those stock pickers often hold shares in the companies that they mention and want to create an artificial demand for the stock, forcing the price up, at which point they will probably take profits and sell, leaving you: the chump buying a stock that is too expensive.
3. Things happen too fast. I like making slow, thoughtful decisions so acting hastily on some tip I see on TV just isn’t my style, nor should it be yours. The best decisions you can make when investing are well thought-out and careful.