7. The Investment Your Neighbor Just Doubled His Money On
We’ve all had one — the neighbor who boasts about the hot stock he just doubled his money on. It’s certainly easy to get caught up in the excitement; after all, who wouldn’t want to double their money? Sometimes there’s the added enticement of secrecy or an “I shouldn’t be telling you this” level of intimacy that makes you feel special that you have a chance to get in on the action.
Why Your Neighbor’s Stock That Doubled Is Toxic
Even if your neighbor is telling the truth about his stock gains — and remember, humans do have a propensity to exaggerate — buying the same stock is rarely a good idea. For starters, if a stock has already doubled in price, it may have run its course, particularly if it’s a legitimate company. If it’s a penny stock, as mentioned above, it might be peaking thanks to stock promoters and insiders who only want you to buy in so they can leave you holding the bag. In any case, you shouldn’t be randomly buying stocks based on the performance claims of others. Only make investments you have thoroughly researched yourself and that meet your personal objectives and risk tolerance.
