I often read about people seeking stock recommendations on Facebook
or asking about the stocks that are suitable for buying in. For me, this is really a tough question to answer well as it usually involves some background understanding of the investor.
You might already be aware that my investment style is primarily based
on “Global Trends” + “Fundamental Analysis”. This means that I spent a lot of time analysing & keeping myself updated of the global trends as well as to run through company financial reports every now and then.
Boring right? If you have read my earlier post, I made several poor investment decisions in the past and these had resulted in a lot of stress for myself. This is the main reason why my first investment advice is to
only invest with your spare cash. In case if you are interested, you can read about how I built up my spare cash too.
So, Why is it so tough to provide stock recommendations?
Because every share purchase carries a level of risk and it is important for the investor to understand whether this risk fits their investment profile before considering
whether they should buy it.
Take for example, if a 80 year old retiree asks me what shares should
he buy with his spare cash, I will be very curious WHY he wants to buy in the first place. For his age, it might be more practical to put his money into the bank or into short-term fixed deposit rather than taking on such a
high risk to buy shares, isn’t it?
But we still can ask for recommendations, right? Well, maybe. But I
am unsure of its usefulness unless we are just trying to find out what other people are considering or have considered at that point. My view is that most stock recommendations will no longer be valid once the market or business
conditions changes; which might come quickly and suddenly. Another reason for myself is that I based my target prices for buying and selling on a set of criteria so my definition of “good buy” might not necessary be the
same for others. Likewise many investors used different yardstick to define a “good stock to buy/sell/trade/invest”.
Is there that much things to learn before investing in a product? For me, the answer is a clear “Yes!!”.
The risk of losing money will always be there when we decide to invest in a product. This is why we need to put in effort to learn about our investment product instead of only asking for recommendations. Many of us might find this to be really tough since we usually lead a relatively busy life out there. But I am sure that my readers here are tough enough to find time to put in the extra mile for your own investment journey. Maybe a bit of motivation
from Mr Warren Buffett might come in handy here. :)
Recommending stocks can be tough, but so are You!
Together, let us all Go & Huat ah!
GoHuat
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