[booop]

I was very interested in trading stocks for a while, and would read up a lot about the markets. I then met a stock broker and he told me that it wouldn't be very different from gambling if I were to invest based on the news without much understanding of how the markets work.

One thing he told me really struck a chord: I spend 8 hours a day at work, and read about the markets in the night or on weekends. But he lives/breathes/eats the stock markets all day and it's been his full time job for the past several years. So my money would be safer if he invested it for me instead of doing myself (unless I had : http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect)

So now every month or so he calls me to recommend a stock and explains why I should invest in it. This let's me use my spare time to develop my skills (since I'm somewhat early in my career) and I've gotten good returns on my investments in exchange for a small commission.

[ffumarola]

Overall, this is pretty bad advice IMO. Investing in individual stocks, even at the recommendation of a "professional" is a fools game. You will be hard pressed to find a "professional" who can routinely and repeatedly beat an index fund.

Also, "professionals" charge high expense ratios when compared to funds through Vanguard, Fidelity, etc. A lot of financial advisors stress the importance of expense ratio as one of the most important facets of your portfolio.

For the record, I invest in index funds through Vanguard with expense ratios ranging from .05% to .22%.

[man_bear_pig]

most stock brokers don't know wtf they're talking about. that's because most can't even beat the snp. most hedge fund managers (intellectually the smartest of the smartest bunch) also can't beat the snp.

you are correct in that you should stick to your core competency. as far as investing, on the side you can invest for shts and giggles but if you think that the market is somehow not that efficient when there's 100,000 ivy league grads who spend 18 hours a day researching in the same markets then, i'm not sure what else i can tell you. trust me, i know a ton of people from wall street. for example, most people who work in private wealth management (people with 10m+) get the stupid bunch out of the entire stack of investment bank. the smartest trade for the company and institutional money/ engage in billion dollar transactions.

now an interesting thing is to study about 1000 hours on the stock market and valuation principles and then invest in a sector you have domain expertise. then you may have an edge. even then you will realize that there's not much of an edge b/c in my old job, i would just expense $10,000 bucks and call you and your bosses and your competitors' bosses up and get the insight into the industry and info i needed to know to make my decision to pull the trigger. so combining commercial due diligence mixed with my investing acumen and access to 100 institutional stock brokers (not the plebeian wealth managers) would ensure that i have an edge.

hope this helps. don't want anyone to lose money.