Common Mistakes in Stock Picking: Getting Tips from EVERYBODY
Welcome to our second article on our series of common mistakes normally people do while picking the stocks. In the previous article we have seen how EMOTION takes the traders towards their money-loss. Another mistake, probably the biggest mistake a trader does listening to everybody and getting tips from every possible source. Getting tips is definitely not a bad idea. In fact it helps when you don’t know doing the analysis. It’s a readymade advice. But “HOW TO USE TIPS” is the KEY OF SUCCESS.
Bus, train or taxi – be it a typical ‘chai ki tapri’ or a corporate adda people just wait to catch the word ‘market’. Everybody starts giving so much ‘expert advices’. Whoever trades, normally get an easy- greed of accumulating money in short cut. Traders just take a chance by listening the catchy tips. The sources are always unknown and all these uninformed acquaintances and some cheerleaders like relatives provoke to invest in wrong stocks which is neither backed by any kind of fundamental or technical analysis, nor the news has any authentic source. It’s nothing but a desperate attempt to impress people by showing extraordinary insider news or grabby tips. And people start following these tips blindly without any further check because it’s very hard to say no to the easy money.
Many a times we listen lots of news in the media or read over internet. It’s not necessary that all the time all the news are correct and all are coming from authentic sources. Possibility is there that these tips have been spread to fudge the numbers. Even following these tips may result into a drastic negative return. All the money saved over a period of time with lots of hard work, can be lost with a single wrong choice.
And the result becomes panic which again can spread lots of rumours and may become a cause of another trader’s loss. The basic problem is though the trader while taking risk or investing by listening these tips know in their back of the mind that they can lose money, but the greed provokes to run behind the easy money. When everybody wants to become the player, people end up being played.
Recommendation: Listen to everybody, take all the tips, but either use fundamental or technical analysis if you can or consult with a practicing consultant or analyst who are professional in their field. Don’t just run behind all the glazy – tips.
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