stock picks in magazine articles

I see stock picks in magazine articles. How do I know if it's a good recommendation?

More and more people are investing in the stock market. The market is huge and the number of investors is even huger. Some people are very successful in the stock market and do very well while others do not. Some people just know when to invest and when to pull out. Some people get lucky. Other people don't really know what they are doing. The biggest part of investing in the stock market is knowing when to invest in which companies.

Some people determine this through fundamental analysis and some determine it through technical analysis. There are still others though who invest when other people invest and invest in what other people invest in. Sometimes there will be stock pick in magazines and such that will say what stocks are great to invest in. The question is, how do you know if these are reliable recommendations? How do you know if investing in a certain stock will really be a good idea? There are a couple questions you should ask yourself.

First question: Can you trust the source? It is important to know the person who is recommending the stock. If a random person came up to you and told you that you should buy a certain car, and you had never hear of that car, you probable would not be too eager to just go out and buy it. How would you know that they knew what they were talking about?

On the other hand, if a friend of yours who works in the car industry and studies cars a lot came up to you and told you to buy a certain car that you had never heard of, you would be a lot more willing to buy that car because you would know that the person can be trusted. That is one way to think of stock recommendations, how well do you know the person (not personally like a close friend, how well do you know the author of the article and what he has written in the past) and how much do you trust their opinion on the subject? Even if you know and trust a person you have to be sure that you trust their opinion on stocks. You have to know that they know what they are talking about when it comes to stocks.

Second Question: Can they back up their claim? Someone may say that you should buy a certain car but if they cannot give you concrete detail about why that car is worth your money, how do you know their opinion is actually founded on real facts. They have to be able to tell you about that car and why it is worth purchasing. Someone who recommends a stock has to be able to tell you why he or she recommends it. Have they researched it? Have they done well with that stock? How do they know that it is a stock that should be invested in?

Finally, when someone gives you a recommendation to invest in a certain stock, you should not just rush blindly into it, do your own research and find out for yourself it what they say is true. Look up the company, look up their stock charts, look and see how well they are really doing. Do not invest in something solely because someone else does. Be sure that investing in that company would be good for you. Maybe they have done their research and think it would be a great company to invest in, buy maybe you do your research and find something that they did not find. Maybe you find information that makes you feel that you do not want to invest in the company for one reason or another.

So, make sure you can trust the source, make sure they can back up their claims and do some of your own research and you should not be able to be led wrong with other people's recommendations.