Hear no evil, see no evil, speak no evil?
Recently I have been re-reading Vic Sperandeo's Method of a Wall Street Master. It is an excellent read even if some of the market conditions in the book are a little dated. One of the general tips that he has, and many other traders have, is to 'never receive or give out trading tips'. Here is his rationale for never receiving tips:
- People giving tips are most likely to want to receive admiration or praise
- The so called 'tip' is usually just someone else's opinion. Unless the tip is based on inside information and then trading on that would be illegal.
Here his rationale for never giving out tips:
- Someone should only have enough confidence to trade based on their own judgment. Victor is inferring really that you need to be careful of someone else trading on your conviction. Develop your own.
In the book Victor makes some good points and he does not suggest never sharing ideas. However, he suggests sharing only in general.
Is that right advice?
This makes sense in the dinner party scenario where someone is mouthing off about the next big stock you 'have to buy right now' . Yes, probably follow his advice and nip to the bathroom. The last thing you want is some obscure penny stock haunting your sleep on the back of some random recommendation. The idea of developing your own judgment is also crucial too. So, don't trade off another person's conviction.
However, sharing analysis in general is still very good and there is a big difference between analysis and a 'tip'.
What about you? Ever taken someone else's advice? How did it go? Ever given advice to only see it go wrong? Leave a comment below on your take on this. I find this a tricky one as if you come across some great analysis then you naturally want to share it. However, I guess there is a difference between sharing the facts of a situation and giving a tip about what someone 'should' do. Keeping it general and non-specific is maybe the answer to avoid falling into this trap.
