It’s A Good Idea To Follow Tips When Investing In The Stock Market?
When a person has the willingness to invest in stocks, he or she usually seeks to find something about it. He looks at some articles on the Internet, ask his friends if they have already invested and sometimes even buys newspapers and magazines to learn more. But unfortunately, some people do not want to be informed, they believe it will be easier to skip that part and go directly asking for anyone who understands the issue, the so called experts.
I like to call experts, tipsters. The only thing they do is distribute guesses. Some well founded, most not. Often, even if these guesses make sense, just don’t work when they should. The problem is that many experts do not know exactly what they are doing. They think they know where to invest but in reality, they themselves do not invest in anything. They talk about something they simply don’t understand.
Moreover, the few who are really good (rare) and give hints that really work, have a serious flaw, the lack of availability. And that may end up with money from any investor neglect.
To illustrate, suppose that Michael receive a tip to buy some GOOG of his friend, a specialist named John. Once you hear the tip, Michael invests his savings in the indicated stock. Soon, the profits of his investments increase greatly. Soon after, they begin to stabilize and then go down. Down slightly and slowly, but soon begin to go down a lot and with speed.
Desperate, Michael calls John asking what to do but nobody answers. When he finally manages to reach his friend, he discovers that the he should have sold the stock a few weeks ago. But now it’s too late, because the profits are all gone.
That is, if you’re investing in the stock market by following cues from other people, it is very likely that you will lose money because in most cases, these guesses are wrong, even if those were offered by a specialist. After all, if their tips were really good, he would not be distributing them freely. And even if he is a super nice guy, that does not mean that his tips will be always right.
The other point is, if your source of information is very good and reliable, you still need to keep up with it all the time. If you received a tip from purchase of Peter, you should wait for the sell tip from that same guy. But what if at the time of the sale Peter is on vacation? Then you will feel the pain of not knowing what to do and therefore will be forced to depend on the decisions of others.
So as I always say, if you want to buy stocks, you must first learn how to invest in the stock market. Must know the markets, assets, procedures. Need to understand how it works so you can take the reins of your own investments without relying on wrong guesses of others or advice from people who are not always available. Remember, to invest properly, you must learn to invest in yourself first, you need education.
Peter Corrs is a brazilian blogger who writes about the Bolsa de Valores in posts like Como Investir na Bolsa de Valores Passo a Passo and Como Investir na Bolsa de Valores Pela Internet (both in portuguese).