- If we still haven't raised any red flags, then step six is to have a look at the company's Web site. A slow-loading, ugly-looking site is a very bad sign -- especially for a technology, Internet or telecom company. A lousy site suggests a shell company with no true assets or products. These are, not surprisingly, good stocks to avoid.
- If all these steps haven't dampened your enthusiasm yet, then go to step seven: Order an investor relations package from the company. You want to receive something professionally written on high-quality paper with glossy photos. It should arrive quickly (but not by express mail). It should contain no typos or printing errors, and certainly nothing that looks like it was quickly and cheaply photocopied.
Note that you can do all these steps without even getting into the fundamentals of a company. The goal is to quickly eliminate the dogs before you waste a lot of time or money on them.
This entire process of reviewing a tipped stock should take you anywhere from 30 seconds to several weeks. Start doing this on a regular basis, and you won't get all hot and bothered every time you hear the next great stock tip.
And that can save you a lot of money.
Barry Ritholtz
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