The easiest articles for us to write are those that can make unequivocal statements that just simply need to be obeyed. So, here’s an instruction from us:
Never take stock recommendations from anyone without thoroughly investigating the stock yourself, as you otherwise normally would, even if they are supposedly an investment professional.
You’ve probably heard this one before. But here are our thoughts.
It’s very unlikely that the person you’re speaking to knows what they’re talking about. They may mean well, but there are a number of reasons why they may just simply be wrong:
- Wrong about the stock being a good investment.
- Wrong to recommend it (if they truly have special insights about the stock, then they and you could be breaking the law by discussing it).
- Wrong to suggest that the stock is a good fit for your portfolio
That last one is important to bear in mind when receiving recommendations from an investment ‘professional’: a professional stock-picker is unlikely also to be a professional wealth planner. It is likely that a professional stock-picker is incentivised – both professionally and egotistically – for identifying stocks that go up in price, not for identifying assets that are a good fit for a specific person’s portfolio. Professional stock-pickers rarely talk to clients even in a professional capacity, so don’t trust their judgement in a private capacity. In fact, you are probably just a guinea pig for your boyfriend’s friend (pictured) to express their ego, because at work they keep making bad stock calls.
Investigate it objectively if you’re interested, but never invest solely on a recommendation.
To the pound 