Everyone is always trying to give you stock advice. I hear all the time about great new stocks that I should just put a little money in my friends tell me that they have the inside track, and that all I have to do is put a little in and Ill get great returns.

Thats just not a good idea, however. Most of them that I have tried havent panned out sometimes they do, but usually its the problem with trying to invest in individual stocks anyway: youre not the only one with a hot tip. Information is rapidly priced into the markets these days everyone who trades for a living likely already knows about whatever you know. And if you dont trade for a living, you just arent as on top of things. The vast majority of shares are owned by big financial institutions, who pay legions of people to keep track of every detail and to be on top of every news report. Even those professional stock pickers usually cant do better than the Dow or Standard and Poors index its just very difficult to do, largely because individual stocks dont have the kind of diversification benefits that a stock index fund does. This makes it extremely hard to beat the market and your friends stock pick just isnt likely to help you do that. They may be right on about what is going to happen, but everyone else is already trying to make the same prediction. Theres a reason very few people get rich playing the markets.