OOPS: When I said "Buy," I really meant "Sell"

The headline on TheStreet.com, on February 22, screamed out "Brocade's a Buy!" The article was posted at 1:55 pm and BRCD was trading at $6.96. Just 20 hours later, after the company reported weak earnings and cut its full-year revenue outlook, the stock tanked more than 20% to $5.57. That's a loss of 1% an hour.

Now I point this out not to cast aspersions at TheStreet.com, the article's author, or the various analysts who were quoted in the piece. Rather I offer it as a warning. The analyst opinions you see, hear and read are not intended to help the individual investor. They are designed to sell something. TheStreet.com wants you to come back so they can sell more advertising. The author wants to add to her portfolio so she can get a better gig at Fortune or The Wall Street Journal. And the analysts are talking up the stocks they follow in order to induce a self-fulfilling prophecy -- i.e., the more people they convince to buy the stock the more it goes up and the smarter they look and the bigger bonus they can get.

That's how the system works, so don't get suckered by the hype. Buy a stock only when you are convinced it's the right choice for your portfolio, your investment temperament, and your timeframe. And, in truth, you're often better off buying a stock when the analysts hate it.

For more investing insights, please check out my new book Your Nest Egg Game Plan and my website at www.HardWorkingMoney.com.