Making Hot Stock Picks

by David Jenyns on March 21, 2008

The stock market is a precarious place, but there are ways to put a degree of certainty into the stock purchases you make.

Brokers, like other people, sometimes have hot stock picks to unload or are interested in building a market in a stock because they have a lot of it themselves.

It is a hopeless job for one not used to stock dealing to pick a few hot stocks out of all those offered.


When you buy, do not buy just one hot stock. Unless I know a company thoroughly and how much of its stock is out and how much overhanging the market in the form of options or founders’ stock, I do not usually invest. Hearsay information is of little use; particularly that which comes from brokers, unless the broker knows the management and gets his information directly from it.

The exception to the rule concerns cyclical hot stocks. These are stocks of companies whose well-being depends on the ups and downs of business. New investors might be overwhelmed with the amount of information they must read and absorb to make sure their hot stock picks stay on top, but all that extra reading pays off.

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