A number of years ago, an economics professor told me that people naturally want “the most for the least.” That maxim certainly holds true in the financial world where “greed is good.” Practically everyone is looking for that hot tip, which will springboard them to wealth and riches instantly.  Unfortunately, most rumors and hot stock tips result in financial ruin instead of riches.  

 

Sure, we’ve all heard of that story of the friend of a friend who heard something from so and so who works at _____ and is now rich as hell. But most often such cases are rare incidents. The truth is, rumors and hot tips are nothing more than garbage, which cause a world of trouble to people who act on them. A good friend of mine recently fell victim to a hot tip he heard from some colleagues at work. The stock? LEH…Just check the headlines and you’ll get the idea.

 

The bottom line: Research is, and always will be, king. So perform your own research, learn as much as you can about a company before investing and avoid hot tips and rumors like the plague.