When I first started out in the stock market I spent a lot of time trawling through books and sites hoping someone would tell me what the best shares to buy were. I was a bit lazy and hoped someone would do all the hard work for me and just give me the information on a plate. It’s human nature I guess to try and find shortcuts rather than put in effort where it might not be required. I did find a lot of sites out there willing to give me recommended stocks for various different areas. Check this one out which was published a few weeks ago. I’m not doubting the persons ability to identify stocks and good investments. I’m sure there’s a lot of research gone into this and its a respectable website so there’s no con involved. My problem with sites offering up this kind of information is two fold. Firstly, how many people read this site and take the advice. They could potentially push up the price of the stock reducing the chance of someone like me picking up a bargain. By identifying stock as a good investment on a popular site they could actually turn it into an over priced stock because too many take the advice on board and buy it! My other problem is that you often have no idea what type of research has been done on the stocks. I know there has been some…but what type of investing model are they following. If they don’t follow the same as you then there’s a problem. For example, a site may recommend a stock to hold on to for a period of a year. What if you’re following Warren Buffett’s value investing technique. Simply because you follow a different type of investing model a good investment could mean something completely different to you.
The point of this whole rant is you have to do the hard work yourself. There are no shortcuts with buying stocks. Do your own research and you’ll know that you have identified a good investment and one that you can hold on too for a lengthy period of time. Maybe it’s just now in my nature to trust anyone with my money! I’m too cautious as I’ve been burned a few times before with reports of a ‘sure thing’. Trust me, they don’t exist. I’d recommend reading sites about how to buy stocks for beginners and learn about different styles of investing. Then apply that logic to your own financial interests. Once you have learned a successful way of identifying bargains there is nothing stopping you. You certainly won’t have to rely on someone elses stock picks. You have to equip yourself with the knowledge and tools and do it for yourself. If this sounds like too much work then look at mutual funds or index trackers. At least that way you know that someone can be held accountable for your lack of returns. That would be the account manager. It’s his or her job to find you stocks to make the fund profitable. On some of the websites you’ll find online you’ve no idea of the motivations some people have for recommending stock. They may be following day trading strategies, you really have no clue as to what the goal is. A fund manager’s sole motivation is to make you money by identifying bargain stocks and then potentially selling them on for a higher price. If there is decent stock market software out there to use then I’m sure the fund manager will bring it into the tools they already use to work even quicker for you.
In conclusion, for todays lesson, don’t rely on stock tips from a random website. If you don’t want to do the research yourself go for a mutual fund. Your money will be much safer in that kind of investment. But what do I know, I’m just another random website offering you advice on the best stocks to buy and stocks for beginners…