5 Stock Tips You Can Really Profit From

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Many investors believe that if you want to win in the stock market, you have to have inside stock tips that no one else knows about. But if you want real stock tips that won't land you in jail yet will still deliver long-term results, you don't have to resort to whispered conversations in dark corners. Following a few simple tips can give you the returns you need in order to reach your financial goals.

Tip 1: Don't rely on the big score.
The first idea most people have about stock tips is that once you hear about a great stock, you should invest every penny you have in it. Indeed, many of the richest people in the world owe much of their wealth to having invested not only their money but their lives in a single company.

But for every investor who's made a killing picking the perfect stock, there are several more who lost everything because they had all their eggs in one basket. By diversifying your portfolio across several different stocks, you can still profit from your great calls, but you don't risk your entire life savings if something unexpected happens to hurt one of the stocks you've chosen.

Tip 2: Look beyond labels.
Many investors categorize themselves by what they like to look for in a stock. Value investors tend to seek out cheap bargain stocks, while growth investors are willing to pay up for faster growth. As a result, stocks tend to get pigeonholed according to which group fits its characteristics best.

If you rule out stocks based only on labels, you'll miss some great prospects. For instance, many growth investors have abandoned tech stalwarts Cisco (NASDAQ: CSCO  ) and Intel (NASDAQ: INTC  ) because their hypergrowth periods are long behind them. But with their shares trading at very low multiples, they don't have to grow in order to provide reasonable returns as value stocks, especially with attractive dividend yields. Similarly, several years ago, Crocs (NASDAQ: CROX  ) was left for dead as not having any of the characteristics value investors generally like. Yet the company engineered a turnaround and returned to strong growth. Only if you look beyond labels can you give yourself the best chance at success.

Tip 3: Think long-term, but don't be afraid to act short-term.
One frequent criticism of buy-and-hold investing is that it's perceived as buy-and-hold-forever. Warren Buffett may have said his favorite holding period is forever, but he has never been afraid to sell a stock that stopped doing what he thought it should, and you shouldn't fear selling either.

The key is to know why you bought a stock. That way, if that reason ceases to be true, you'll have an automatic indicator of when to sell. Without that reason, you'll simply be reacting based on emotion, and that's always a bad way to make any investing decision.

Tip 4: Be a penny-pincher.
It may not seem worth it to shop around for the lowest brokerage commission on stocks or the cheapest mutual fund or exchange-traded fund. But fractions of a percentage point add up over time, and keeping money in your pocket rather than letting it go to your financial institution can make a huge difference to the size of your nest egg after years of investing.

That doesn't mean you should always skimp, especially if you're getting a unique opportunity with your money. But often, you'll find very similar options at much different prices. For instance, until very recently, both Vanguard Emerging Markets (NYSEMKT: VWO  ) and iShares Emerging Markets (NYSEMKT: EEM  ) tracked the same underlying index and mostly owned the same stocks. Yet the Vanguard fund charged about a third what the iShares fund did. Even considering other cost factors, there was little reason for long-term investors to pay higher expenses.

Tip 5: Be humble.
No matter how long you invest in stocks, never stop trying to learn new things. Between innovative financial products and unprecedented market conditions, it's a lot of work to keep up to speed on the investing world. But as long as you never think you've learned everything you need to know, you'll be open to new experiences that can open up profitable opportunities.

Tips to live by
These stock tips may not give you inside information, but they nevertheless have the potential to change your investing life. Follow them and you'll greatly improve your chances of succeeding with your investments.

For investors willing to open their minds to a former growth giant, Cisco is now on the radar of value-oriented dividend lovers. Get the latest on the routing juggernaut by reading The Motley Fool's premium report. It can be yours today, so don't wait; click here now to get started.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2347876, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:07:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CROX $7.86 Down -0.20 -2.48%
Crocs CAPS Rating: **
CSCO $30.15 Down -0.01 -0.03%
Cisco Systems CAPS Rating: ****
EEM $37.60 Down -0.01 -0.03%
iShares MSCI Emerg… CAPS Rating: ***
INTC $35.15 Down -0.28 -0.79%
Intel CAPS Rating: ****
VWO $38.07 Up +0.01 +0.03%
Vanguard Internati… CAPS Rating: *****