Be wary of financial high-pressure systems

Posted: February 13, 2013

MY DUMBEST investment was to buy shares of Rambus at its all-time high on margin, due to an early-morning phone call to my house from a high-pressure "financial adviser" from my full-service brokerage. He told me that a court decision was ready to be announced and that this baby was set to pop! I was so clueless that I gave him the green light, only to see the stock plummet that very same day. I became pretty mad and woke up to the fact that I needed to take the reins of my financial future. I closed my account and stayed out of the game until I learned more. It was a hard lesson, but a valuable one.

- B.M., Queretaro, Mexico

The Fool responds: Occasional errors are inevitable, but your story offers several red flags: Be wary of anyone pressuring you to buy an investment, as he or she may be compensated based on that. Also, be careful using margin (i.e., borrowing money with which to invest), which can amplify not only your gains but also your losses.

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