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Thursday, September 9, 2010

Why to Avoid Free Stock Tips?

The stock markets are characterised by a constant hustle bustle. And if stock tips were rainfall, we would have enough of a deluge to drown the entire island city of Mumbai. They come from numerous sources. Through the talking heads on TV, ridiculous stock market games on business channels, magazines, newspapers, SMS, brokers' sales forces, ads and the list goes on. The average person having even the slightest interest in the stock markets is bombarded with stock tips all the time.

Amongst all this noise, it is often difficult to keep track of who said what, and just how much actually came true. Over a long period of time, finding out which source of 'tips' have consistently lost investors money, and who those tips belonged to, can be next to impossible. There is no regulation governing this activity and no official record keeping.

This sorry state of affairs though is a huge opportunity for many. It creates a platform where almost anyone, no matter how clueless or unscrupulous, can come along and throw in a tip or two. And get away completely scot free, even if that tip turns out to be a disaster of a long term investment. And even more alarming, without any records of past performance, he can continue to do that over and over again without ever being held accountable. Bad advice very easily drowns away in the incessant noise of the markets. And so do the deeds of bad advisers.

As things stand today, probably the most important thing for an investor to do is to ascertain the credibility of his source of investment advice. And strictly keep away from those sources of tips that have no accountability whatsoever.

We have observed that many times investors simply invest relying on broker’s calls, tips over SMS, free tips floating in market by various media channels etc without evaluating the actual value behind the investment. Such investors simply ignore considering stock investment tools like EPS, PE ratio, PEG ratio, price to book value, ROE, ROA etc before making an investment decision.

It’s always advisable and recommended to go through the company’s fundamental before investing your hard earned money into stock market. Do go through reliable and authentic research reports to make an educated investment decision.

If you are a serious investor, you can subscribe to Hidden Gems & Value Picks, to make an educated investment backed by unbiased and sound research reports of micro, small and mid cap companies. Team of equity analysts at Saral Gyan, do review the companies performance covered under Hidden Gems & Value Picks on six monthly basis and update our investors to either hold the stock or to sell quantum of their holding to do partial profit booking.