You should never automatically invest just because you get a hot tip from someone. Good investment selection means looking at several sources before you decide on a stock.
There's no shortcut. That said, getting opinions from others never hurts, just be sure to carefully analyze the information you get.
Consider the source: Frequently, people buy Stock based on the views of some market strategist or market analyst. People may see an analyst being interviewed on a television financial show and take that person's opinions and advice as valid and good.
The danger here is that the analyst could easily be biased because of some relationship that isn't disclosed on the show.
It happens on TV all too often. The analyst says, "Blah Blah Corp. is a good buy with solid, long-term, upside potential." You later find out that the analyst's employer gets investment banking fees from Blah Blah Corp.
Do you really think that analyst would ever issue a negative report on a company that's helping to pay the bills? It's not likely. Being suspicious can keep you from being a sucker.
Get multiple views: One source isn't enough to base your investment decisions on unless you have the best reasons in the world for thinking that a particular, single source is outstanding and extremely accurate.
A better approach is to scour current issues of independent financial publications, such as Barren's, Money Magazine, Smart Money, and other publications.
Gather data from the SEC: When you want to get objective information about a company, why not take a look at the reports that companies must file with the Securities and Exchange Commission (SEC)?
These are the same reports that the pundits and financial reporters read. Arguably, the most valuable report you can look at is the 10K. The 10K is a report that all publicly traded companies must file with the SEC.
It provides valuable information on the company's operations and financial data, and it's likely to be less biased than the information a company includes in other corporate reports, such as an annual report.