Ouch!

I didn't know what I was doing. I didn't even understand what the companies were doing. I think the only research I did was to read the message boards about the stocks on ragingbull.com. It took me awhile to gain perspective on those trades (I'd provide a link to the charts just so you could grimace, but the ticker symbols no longer exist). I look at it now, not in terms of losing money, but as a semester's tuition at The School for the Foolish Investor Who Invests Ignorantly on a Hot Tip. I have never forgotten this lesson. It must have been a good school.

I should have remembered Proverbs 15:22 before I acted so foolishly:
"Plans fail for lack of counsel, but with many advisers they succeed."

This principle of seeking wisdom from an abundance of counselors is repeated throughout the book of Proverbs (see 11:14, 20:18, 24:6) I believe this spiritual principle has very practical financial applications. I now am much more cautious and do more double checking before I move my money into a new position. I have more automatic investments set up instead of rushing in to try to time the market. I try to talk openly to friends about investments that I am making. I don't act on advice that I don't fully understand. And I wouldn't take a "hot tip" even if it were to come from an uber-trader like David Neubert.

I seem to rely on mutual finds more than individual stocks now. I'm not saying mutual fund investing is God's will, it's just more my style. I know that mutual funds carry with them management fees that individual stocks don't have. But it is just this premium that I am willing to pay to gain counsel. The honest reality is that I am an elementary school teacher and I don't have the time or the desire to do the research required to invest in many individual stocks.

Doesn't Jim Cramer say, "If you can't spend an hour a week researching each of your stocks, then you should hand off your portfolio to a mutual fund." Cramer may or may not have been paid by mutual fund money managers to say that, but I understand what he is trying to say. If you don't know why you are buying XYZ stock you won't know when you should sell.

Investing in a "hot tip" stock also tends to lead to greediness, another big no-no in the Bible. Christian investing is disciplined, responsible investing that protects the financial means that God has blessed us with.

I hope you can learn from my costly mistakes. This is the lesson I learned. Maybe this will save you from paying your own costly tuition at the The School for the Foolish Investor Who Invests Ignorantly on a Hot Tip.