Be careful of stock recommendations
Dec 15, 2014 6:03:20 GMT 7
candy188, zuolun, and 3 more like this
Post by oldman on Dec 15, 2014 6:03:20 GMT 7
Over the years, I have learnt to be skeptical over the many sources of stock recommendations.
I am cautious about stock broker recommendations as I find it hard to understand the business model of a research division within a stock broker. At the end of the day, stock brokers are commercial organisations with the primary interest of making money. Analyst recommendations are unlikely to make a direct impact to the profitability of a stock broker. Even if an analyst is good, the customer can still chose to buy or sell stocks through another broker. I don't envy the job of a research analyst in a stock broking firm as there are bound to be many grey areas of potential conflicts of interests.
I am also wary of websites that appear to be independent but are owned or influenced by public relations companies whose interest is to promote the listed companies that pay them a monthly retainer fee. Rarely does one find a truly independent website. I like going to such truly independent sites like Investor Central ( sg.finance.yahoo.com/news/provider-investorcentral/ ).
As for forum websites, I enjoy reading the writings of small investors as they can be pretty knowledgeable and they share the info in the hopes that others will join them as shareholders. I too started as a small investor and I know that having smaller sums of money means that I have to interest other investors in those companies that I have invested as my capital alone is unlikely to influence the market. Many of my investment ideas arose from such postings.
However, I am extra careful about the sharing in the forums from market players as these folks make their money from the frequent buying and selling of stocks and it is more likely that they will talk up the stock only to sell to those newbie investors who get excited about such stocks. If you have been in a forum long enough, it is not difficult to pick up the small investors from the market players. Also, be aware that market players are unlikely to work alone in a forum and after a while, one can also identify players that belong to the same group as they often praise the others in the group and vice versa.
Hence, be very careful what you read freely in websites and in stock forums. It is good to assume that there is usually no free lunch in the stock market. You should do your own homework before you make any investment in the stock market.
I am cautious about stock broker recommendations as I find it hard to understand the business model of a research division within a stock broker. At the end of the day, stock brokers are commercial organisations with the primary interest of making money. Analyst recommendations are unlikely to make a direct impact to the profitability of a stock broker. Even if an analyst is good, the customer can still chose to buy or sell stocks through another broker. I don't envy the job of a research analyst in a stock broking firm as there are bound to be many grey areas of potential conflicts of interests.
I am also wary of websites that appear to be independent but are owned or influenced by public relations companies whose interest is to promote the listed companies that pay them a monthly retainer fee. Rarely does one find a truly independent website. I like going to such truly independent sites like Investor Central ( sg.finance.yahoo.com/news/provider-investorcentral/ ).
As for forum websites, I enjoy reading the writings of small investors as they can be pretty knowledgeable and they share the info in the hopes that others will join them as shareholders. I too started as a small investor and I know that having smaller sums of money means that I have to interest other investors in those companies that I have invested as my capital alone is unlikely to influence the market. Many of my investment ideas arose from such postings.
However, I am extra careful about the sharing in the forums from market players as these folks make their money from the frequent buying and selling of stocks and it is more likely that they will talk up the stock only to sell to those newbie investors who get excited about such stocks. If you have been in a forum long enough, it is not difficult to pick up the small investors from the market players. Also, be aware that market players are unlikely to work alone in a forum and after a while, one can also identify players that belong to the same group as they often praise the others in the group and vice versa.
Hence, be very careful what you read freely in websites and in stock forums. It is good to assume that there is usually no free lunch in the stock market. You should do your own homework before you make any investment in the stock market.
