Corey Grusden home

Beware of hot stock tips

Too many times I hear people say “I hope it goes up”, that are invested in the stock market. Most of the time it’s a given these people, and most everyone else that are not in the business, don’t research anything, or very little. It’s a hot stock tip, or something that someone tells them about, and then people jump in for a few bucks and think they’re going to make metric shit tons of money. It’s unfortunate because I’ve seen this movie 1,000 times before.

It doesn’t *usually* end well for the person who put in money after they here about the hot stock.

I can’t tell people to research more, because that takes a lot of time and that is definitely the better route to go. What I can do though, is tell people to follow some simple rules that I learned from Jesse Livermore (one of the best stock traders of his time in the 1920’s) is to just wait and watch it. If you can watch the stock on your phone maybe once a week before you put money into it, you’ll understand whats going on a tad bit more. If you want to get a little more adventurous, you could learn more about Jesse Livermore and follow some of his simple rules.

I follow one of his rules to some degree. He says to decide on a certain amount that you want to put into a stock. For example we’ll use $10,000 total we want to put into Microsoft ($MSFT). Instead of putting all $10,000 into that stock immediately when someone tells you about it, just put in 20% of that amount and wait a little bit longer to see how it goes. So I would be putting in $2,000 right off the bat and then waiting to see if it goes up or down in the next month or two. After that, put another 20% in, if its going up. After waiting somemore, put in another 20% if it has gone up, this way you know its a winner. If it had gone down, you don’t put anything into it yet. After putting in 60% and it’s still moving up in price, then putting the final 40% and going from there.

Obviously this isn’t financial advice, since I’m not a certified financial planner, but learning some simple things from the greats is a good way to learn quickly and not get burned.