How To Develop A Vision To Ensure Success - People's Perceptions
at shares to buy and sell can be found in:
i financial news sites (such as times (subscription or Telegraph.co.uk and
ii e-newsletters from brokers.
Such advice can be useful if considered properly. A cynic may ask, if these people know so much about the stock market, why don't they play the market themselves instead of telling everyone else?
The commonest complaints against such advice are:
i the advisers tell you what to buy and when, but never tell you when to sell,
ii the advisers never give you any track record to show you how good (or otherwise) they are, and
iii everyone else gets the same advice, and that in itself can influence the share price.
It is often said that when information or a “buy now” advice reaches the media it is time to sell!
The last point is perhaps the most pertinent. All the market-makers also read the financial news sites, emailed newsletters and other tipsheets. If a company is recommended and enough people follow that advice, the rule of supply and demand will cause that share price to rise. The naïve investor will see this as proof that the advice was correct, rather than as an obvious example of self-fulfilment. He may learn that lesson the hard way when he comes to sell the shares.
Any such short-term effect described above is only likely to last for the period of account (two weeks). If you really believe that the advice is sound, instead of buying, you may choose to wait the two weeks, to the next account, to see if the price has reduced after the initial interest. Such a share may then become a good bargain as disillusioned buyers seek to sell thus forcing down the price. When this website has become a bestseller and everyone is waiting two weeks before buying tipped shares, you will need to develop a new strategy!
The best advice is that which is supported by argument. You can then weigh up the merits of the argument against your own understanding, and nothing can beat your own understanding!
Stockbrokers'emailed newsletters are sometimes regarded as offering a better quality of advice. First the stockbroker's reputation (and hence his trading ability) is on the line, and secondly the advice is given to a much more restricted audience, with the result that the advice itself will have little or no effect on the share price.
Better still is the personal advice obtained from the stockbroker, but remember that the cleverest analyst will never be right all the time, so don't abandon your own understanding
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