Most serious investors ridicule tips and those who rely on them. Fidelity's Peter Lynch, who used to run the mighty Magellan fund, dismisses them as ''whisper stocks...where the sizzle is so delectable that you forget to notice that there is no steak''. He reckons he has lost money on every one he has ever bought.
Lynch argues that all share recommendations should be treated on their merits, not on the record of the tipster.
The only tipster who has personal credibility is the one who speaks from intimate knowledge of the business whose shares he is tipping.
If a restaurateur comments that a new rival is pulling in the customers, his testimony is worth listening to. If he sings the praises of a biotech share, his eulogy is worthless.
The other problem with share tips is that they tempt novice investors to trade their share portfolios too actively.
Buying and selling shares costs money, and there is always a spread between the buying and selling prices. With a large company the spread might be around 1 per cent, but it can be substantially more for smaller companies.
The combination of costs and spreads means that the shares of a large company have to move by around 5 per cent before the investor breaks even on a purchase and sale - and more for smaller companies. But many private investors continue to lust after tips.
A new service called The Tiptracker Guide should help them limit the damage this craving does to their wallets. The US, which is full of tip-sheets, has long had publications which check their records of success or otherwise. Now, a former journalist has produced a UK equivalent.
Earlier one-off tip-checks have usually taken a single week's share tips often the traditional new year naps "" and checked performance over the following 12 months. Tiptracker also takes all the recommendations made by its selection of tip-sheets and newspapers over the first three months of 1995, and tracks their performance up to the end of March 1996.
So, the reader can see their day-to-day success rate, not just their party piece. Not losing money is just as important to successful investment as making big profits. Once you have lost some of your starting capital, the risk/return balance moves against you. You have to take excessive risks to get an acceptable return on your initial capital.
So what Tiptracker calls its lose-win ratios are a welcome innovation. This works out what proportion of the tips would have lost the customer money. Figures alone, though, are a notoriously fallible guide.
And what is just as useful as the guide's success ratings is its analysis of the publications' stock-picking strategies - or their lack of them.
For instance, it argues that the Analyst, a glossy monthly, is useful to the 'buy and hold'' investor who likes growth stocks.
This is partly because its approach is more methodical than that of most of its rivals but also because the people who write for it do, in at least some cases, talk to the companies they write about rather than regurgitating brokers' circulars.
Tiptracker's endorsement of the highly specialised Techinvest, which concentrates on technology shares and has a very good overall track record, is suitably larded with caveats: recommended only for active investors comfortable with a high level of risk. It points out that, although some of the tips have done brilliantly, some have done very badly and the publication seems to have no consistent strategy.
Techinvest has a good reputation, but a few more caveats would have been in order. First, the period during which Tiptracker conducted its tests was one where technology shares were rising very strongly. It was an ideal climate for Techinvest.
The second point is even more obvious: anyone who puts more than a minority of his money into technology shares would have a wildly unbalanced portfolio.Several of the more popular tip-sheets get a suitably scathing report. They may be expensive, but their records are often lousy. Tiptracker is worth a thorough read by anyone tempted to splurge on a specialist tip-sheet, or even follow the tips in his favourite newspaper.
You might end up agreeing with Peter Lynch. More sizzle than steak.
