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With the increasing popularity of tipping, encouraged especially by the once-soaring stock market, is there any place for the Foolish investor to consider this glut of "tipping" opinion? Not really. There are many arguments against slavishly following any supposed team of share gurus.
Tips aplenty
Firstly, there is the regularity of most investment publications' suggestions. A handful of tips, each week, every week, must dilute the effectiveness of their selections. A certain number of companies will be required every so often, and as time goes on, so more and more companies will enter the investing spotlight.
Obviously, the constant desire for fresh proposals will lead to marginal investment suggestions from the tipster. Those inferior suggestions, in turn, will lead to share price mediocrity for anyone subsequently taking the advice. There is a definite suspicion of "what can I tip this week?" by those tipsters having to continually run on a publication treadmill.
Bull or bear? Whatever you like
Secondly, just about any company can be given a positive or negative write-up. Take our Foolish Duelling Fools features. As a writer who has had to take a certain point of view in these articles, I've found that it's very straightforward to construct a convincing bull or bear case regardless of the company involved.
For instance, take Lastminute.com (LSE: LMC). Now, I'm an investor who takes into account such things as profits when making an investment decision. That being the case, the loss-making online travel agent would hardly be on the top of my personal stock market shopping list.
Yet, with references to America Online (Nasdaq: AOL), the phrase "no such thing as bad publicity" and even implying that the legendary luddite Warren Buffett was an Internet startup investor, a persuasive bull case was easily composed. As you can see from the Duelling Fools discussion board there are always two sides to every corporate "story". But the tipster will only give you just one story, and not necessarily the correct version.
No early retirement then?
The third aspect of why following share recommendations usually leads to ruin comes from asking this simple question -- "why is the tipster still working?" Surely, if any investment expert could consistently pick the stock market winners of tomorrow, then they wouldn't be troubling themselves with the hard slog of publication deadlines. Sure, the experts would keep on stock picking, but they'd be doing their research at their own pace from their own private beach. Those with a really superior and proven investment record ought to have no need for regular employment.
A Foolish tip or two
So, if you've suffered financially at the hands of an unsuccessful tip or two, how about following this Foolish advice instead?
If you're prepared to Foolishly take control of your own finances, then the journey starts at the Fool's School. Here, you'll find our Foolish guide to buying shares. Alongside discovering how the stock market, market makers and brokers all work together, we've given some pointers as to how to look for investments on the stock market yourself. Instead of relying on those tipsters, you can easily become your own tipster.
Ditching the pundits will mean having to get a feeling for those awkward financial details. Thus, more essential reading for the self-reliant Foolish investor will be to learn how to read an annual report in five minutes. Then comes the tricky subject of company valuation. Perusing the various methods of valuing individual shares will inform you of the factors that make a share a "buy" at 100p, but a "sell" at 500p.
Another great way of learning how to assess individual companies would be to follow the fortunes of the two Foolish real money portfolios. The co-managers of the Rule Shaker and Qualiport regularly describe their stock picking decisions in full view of the Foolish investing public. Indeed, a full introduction to all the Foolish investment strategies can be read here.
Interactive schooling!
And if that wasn't enough, the Motley Fool is now offering its own interactive school of investing! In a series of in-depth e-mail seminars, Foolish pupils will be able to look at what makes winning companies, how to recognise growth trends, the truth about cash and debt, and how to evaluate businesses as potential investments. And in a unique move, they'll be dedicated discussion boards for participants to subsequently quiz the Foolish teachers.
So, those wanting to rid themselves of the underperforming tipsters ought to enrol right now!
And just one final thought. If you think all of this going back to school malarkey is too much, and would rather rely on others doing the investing research for you, then here's a final "tip". Forget the tipsters and check out an index tracker instead.
Where Next?
• Spend some time in the investing classroom at the Fool's School
• Beware of those tipsters, write Alan Oscroft (TMFAlan) and Mark Goodson (TMFFatBlokeMarge)