Your Money - sort the gold from the garbage.
Business stories in the newspapers, conversations with knowledgeable friends and chats with a financial adviser are among the most common sources. Another is to browse some of the thousands of websites that are dedicated to providing financial information for investors. These come in all shapes and sizes, ranging from facts and figures to general opinions - and sometimes specific advice on which stock you should go out and buy today, and why you're a fool if you don't.
Used sensibly, these sites are a valuable tool for any investor. But they hold traps for the unwary. Here are some tips on how to make wise use of them:
Don't lose yourself in the data
Popular sites such as Yahoo Finance and, in the Middle East, Btflive are a mine of fascinating information about the share price history of individual companies and the ups and downs of stock indices. Want to see what the price of India's Tata Motors has been every day for the past three years - and compare it to the movements of the UK's FTSE 100 index? Yahoo can tell you. But it's easy to go overboard with analysing data whose significance you don't really understand - if indeed it has any. Make sure that you, and not the websites, are in always the one in control.
Be wary of stock tips
The UK's Moneyweek carries 'red hot' share tips together with articles urging caution about other stocks. Nothing wrong with that. Such opinions can be very valuable. However, treat them as part of your background reading rather than the driver of your decision-making. In the UAE, Dubaisharetalk carries posts by members of the public about which UAE stocks they think will rise or fall and why. Pearls of wisdom lie alongside opinions of complete and utter absurdity (though who is to say which is which)?
They're just trying to sell something
Some websites - or individual contributors to them - may have a vested interest in what they are saying.
For example, a series of posts in different names might advocate buying property in a particular location - because it's bound to go up soon. Just possibly, the authors could all be the same person - standing to profit nicely if others act on their advice. Stay alert for such scams.
Don't pay for low quality
Some financial tipsters make a living selling advice newsletters to investors. Which begs the question - if they know so much, why haven't they retired as millionaires already from their own investments? Some newsletters contain valuable insights. But before you buy, compare the advice these tipsters have given in the past with what actually happened later. Strangely enough, some of them are not very happy to be asked about that.
Bob Parker is managing director of Holborn Assets. If you have a question for Bob, email him at firstname.lastname@example.org
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