In the book, Vic Sperandeo’s Method of a Wall Street Master, he warns traders about the danger of ‘recommendations’. The book is a helpful read even if some of the market conditions in the book are now dated. One of the general tips that he has, is to ‘never receive or give out trading advice’. Here is his thinking for that:

  • People giving advice are most likely to want to receive admiration or praise.
  • The so-called ‘advice’ is usually just someone else’s opinion. Unless it is based on inside information and then trading on that would be illegal.

He then goes on to say why he is against giving recomendations to friends even though wanting to help someone else out is admirable: Someone should have enough confidence to trade based on their own judgment.

Victor is inferring really that you need to be careful of someone else trading on your conviction. So make sure that develop your own conviction in trading.

In the book, Victor makes some good points and he does not suggest never sharing ideas. However, he suggests sharing only in general.

What do you think?

This makes sense in the dinner party scenario where someone is talking to everyone about the next big stock you ‘have to buy right now’. Victor would probably say to excuse yourself and avoid the situation. The last thing you want is the name of a stock haunting your sleep on the back of some random recommendation.

However, sharing analysis, in general, is still very good and there is a big difference between analysis and an ‘advice’ as the analyst presents the information so that traders can make informed decisions.