Investing: Just ask Warren Buffett!
Source: Equitymaster.com "Stock XYZ is trading at Rs 20 now. It will go up to Rs 50 in 3 months time, GUARANTEE!" "MNC Technologies is Rs 10 now, it will touch Rs 35 in 6 months time, SURELY!" No, these are not our recommendations on any particular stocks for investment! So, do not get too excited! We are just summarising some of the 'so-called tips' that many 'so-called knowledgeable market players' dish out to their customers. A large number of these are quite simply nonsensical and put at great risk, the money of the investor - YOU!
Most of the short-term tips, which could range from 3 or 4 weeks to 6 months or thereabouts, are news-driven, largely removed from fundamentals. These could be due to the company receiving a large order, due to which sentiment on that stock has improved and it is likely to move up rapidly in the near future. Or it could simply be due to operators taking positions in the scrip, in which case, buying into it would be fraught with risks, since, as and when these operators offload their positions, the scrip would plunge rapidly. Such scrips may be entirely stripped of fundamentals and be highly speculative and it is often in such scrips where small investors get their fingers burnt. An example is 'Z' group scrips, which are generally illiquid and operator-driven.
While we are not necessarily saying that investing in all such stocks will be speculative in nature, we do believe that if one is investing in the stock markets, one should do so with a long-term view of the company's business and accordingly take a call. The logic is simple - stock markets have the potential to deliver the highest returns among most asset classes and accordingly, the risk of investing in them is considerably higher than, say, bank fixed deposits, or PPF.
Keeping greed under control is a very difficult thing to do, but one that can earn fabulous dividends for any investor. Just ask Warren Buffet!
