Everyone has had an experience with bad investment advice. Usually a friend or colleague has told us about a wonderful new product service that has great earnings growth potential. Unfortunately this isn’t always true and is often nothing but stock hype.

Experience in the reading of stock situations – which are dynamic in nature – and good timing are just two of the attributes necessary if you are to be able to spot the next new product service or ’superstock’. On top of this, hard work is required in the form of solid and thorough research.

My best advice is to speak with someone who has been personally successful in playing the stock market. I’m not talking about someone who is a stock or commodities broker. This person should be an outsider who took a chance and won big. Ask this person how they did their research and what made them pick one stock over another.

If you are a newcomer to the stock market, I suggest that you should do some training lessons first. Just get started by giving yourself some play money like perhaps $10,000. Now keep track of all the stocks, which you think are worth investing in – and try “selling” them at the right point in time. Keep in mind that in reality you have to pay fees for each transaction to your bank or broker. After about two months calculate how much of your imaginary money you won or lost. Were you successful?

You can use your research as a guide. Buy stock from a business that is introducing an important new product service. If the new product service is successful that you should make a profit. If it doesn’t do very well, then you should take more care over your research. Consider whether the service has a large market appeal, how well the introduction was run and whether the company had good publicity.

Intuition can be a powerful tool for picking winners, but you have to be careful. Research and experience are essential parts of successful intuition, so make sure you put forth the effort here. Professional athletes earn their “luck” on the playing field by training, practicing, studying, and working out. If you do the same, then you too can strike it big.

Practically everyone has been a victim of bad investment information in the past. Usually, a friend or business associate tells us about the next big investment or new product service that has huge earnings growth potential, but it turns out to be nothing but stock hype. To prepare for a career in investing, set an imaginary budget for yourself, make a spreadsheet, and start logging the transaction you would make were this money real. After two months, see how you fared. Always do your homework and let research (not hype) guide your decisions. Luck sometimes plays a part, but solid research is always necessary when investing.

- Mark Crisp