Hands up all those clubbers who get approached by friends and acquaintances who 've ever said the above line? Or is it more of a case of "Have you got a hot tip for me?"
In the early part of this year of course the stock market was a place of frenzy. Volumes were high, and to be honest making money was (fairly) easy. "Hot tips" were the talk of the pubs, and it was just as common to hear a crowd of people in a pub discussing shares as it was to hear them discuss football.
I'm not a fan of the "hot tip" approach. Such tips usually revolve around penny stocks, and, if you think about it, why would anyone who REALLY had decent inside information make it available to all and sundry? It would be more than their job was worth!
In any event, the last 8 months have shown the other side of the market (certainly with regard to telecoms, media and technology stocks): and you can always tell when a bullish period is at an end because all the literature promising you ridiculous returns from penny shares stops landing on the doormat or falling out of your copy of Investors Chronicle! Those highly ramped shares (on sites other than this one, of course) such as Arthur Shaw(LSE: SAW), Orchard Furniture(LSE: OFU), Pacific Media(LSE: PCM), Birchin(LSE: BIR)et al have just not delivered the goods (unsurprisingly) and I would imagine most investors are left with heavy losses if they are still in those stocks at all (no doubt someone will shout me down and prove me wrong, but heigh ho).
So, as Fools, we take no notice of hot tips. But where do clubbers get their investment ideas from?
Tipsheets?
Personally I am not a fan of tipsheets. I am never certain whether or not to trust the information printed. I have heard of publications that portray themselves as tipsheets but are nothing more than brochures for companies willing to pay to go in there. I am not knocking all tipsheets -- I know some have better reputations than others -- but the problem is that the morning that a tipsheet is published the prices of the shares tipped normally rocket, so you would end up paying a hefty premium if you were to buy. This is not to be taken as a recommendation but the Hemmington Scott publication IFG (Investing for Growth) is quite good if as a club you do not have access to Company REFS.
Company REFS
Talking of this, and for those who don't know, REFS is an acronym for "Really Essential Financial Statistics", a publication by Hemmington Scott which costs in excess of £700 per annum for a monthly subscription, either in hard copy or on CD. REFS Online has already started and if a club joins REFS then they are happy for a password to be given to all members of the club so that all members have access, BUT... only one member can access REFS online at a time. Still with a bit of organisation and an instant message service like Microsoft Messenger that should not be too hard to get around. I confess that I do not know the REFS Online annual subscription but would imagine it would be in the £500 region and for a new club that amount of money is a sizeable chunk. However it does give you daily access to the REFS page for each company and that sort of information could be invaluable.
The Internet
This is where stock pickers have a dilemma. There is now so much information available free of charge on many, many sites (especially this one!) that the private investor can be presented with everything he needs to know in just a couple of mouse clicks. But what information can be trusted? Basically the RNS (Regulated News Service) run by the London Stock Exchange is obviously a source that is sound. Analysts' opinions, forecasts and consensus is also freely available but beware; these are only opinions! Just because they are analysts it doesn't mean they will be right. Just look at the recent downgrades by analysts on the major tech stocks "across the water" in the USA. Yet, just a few days before the downgrades, the same analysts were incredibly bullish about the same stock! Also avoid putting too much credence on bulletin board comment, no matter how well informed it may appear to be. Always do your own research.
The Fool discussion boards are pretty good places to hang out, and I must say that the amount of ramping on this site is very small indeed. There are "strollers" as they are called who roam the boards, mainly offering help and advice to Fools but also keeping an eye out for dodgy or unsavoury postings. But this type of policing is practically unnecessary over here because the average Fool will not tolerate it! Every time a ramp or similarly poor post appears, readers either reply in a suitable vein and then, if it persists they will leap for the Problem Post button. That alerts the company to the problem and it is usually dealt with accordingly by one of the Community team.
So, just a few ideas on how to research companies or get investment ideas. What other methods do you use? All answers and other comments to the Investment Clubs board.
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