Monday, December 7, 2009

Who can be trusted in the market?

There are so many players in the market and who are the one you can trust?

Recently one of my friends told me that his broker recommended him a stock. He bought it, and since then the price of that stock keeps dropping. I don't understand why he chose to believe in his broker where his broker don't even share out his portfolio at all. This incident make me has the urge to write this post.

In my opinion, there are two people that you can trust in the market. The first one is you of course. If you cannot trust your own judgement in buying stock, why buy it in the first place?

The second one is someone who shares with other what are the stocks he buy or sell, show people how his strategy can work by using himself as an example, but will not make any recommendations.

Give you an analogy. If you want to learn how to play a piano, will you find someone who can talk about the history of piano all day, or someone that can demonstrate his skills by playing the piano in front of you? Of course for myself I will choose the second one as he has the skills who can show me the right way to play the piano.

Every morning, some tv channels always have analysts to talk about the market. They can talk very well and normally with some recommendation on what share to buy. Do these analysts ever show you their portfolio, tell you exactly what strategy they are using, any prove of their winning track record? The answer is almost all "NO". Basically these analysts are just paid to write and talk, just like someone who just talk about the history of piano and you don't know whether he can actually play the piano or not.


SK Lim said...

Your strategy is similar to mine. Me, I always consider the worst case scenario, which is, the share price drop drastically overnight and my $ got stuck. If so, avg down only works for good co.

How you rate SPH and why it is not in your radar?

Majority of my ammo now is reserved for volatile blue chip like SGX, Venture, etc. Just waiting for correction. Good?

Createwealth8888 said...

Warren never tell people what he is going to buy. People knew what he has bought through filing because of the substantial buy.

Warren bought into biz and become substantial shareholder but retail investors are just buying stocks and never ever think that you are buying into biz like Warren.

Know the difference.

Createwealth8888 said...

Your Broker's advice

Freedom Achiever said...

Hi Createwealth8888,

Thank for sharing the information with me. :)


Freedom Achiever said...

Hi SK Lim,

I am not total sure about the prospect of newspaper and magazine as most of the thing are online.

My strategy is to buy undervalued good company stock and collect dividends along the way. Now I am waiting for my singtel dividend of $620.

Have you started your journey towards financial freedom?