“On the sixth day of Christmas my broker gave to me…6 stocks to buy now…”
There is an illusion in the investment world that deceives many people. This is the illusion of control. When you read an article or an email about the next best stock you should purchase puts an assumption on the person who writes the article and the reader. The assumption placed on the writer is that they know the future, or know unknowable information. This would be information that has yet to be disseminated to the general public.
There are a couple of issues with this assumption. First, with accessibility to the Internet, information travels much quicker now-a-days than it did 20 years or even 10 years ago. If you type in the word “stocks” in Google you will receive 110 million results, “hot stocks to buy right now” will reveal 1.85 million results. It’s amazing how many pages you would have to go through just to keep up with the most up-to-date- information.
Second, if this is such a hot pick then why would anyone tell me about it for $29.99 a month or per trade? If it were me, I would be making all the money for myself! But, if I knew information about the company that no one else knew, then I would be an insider and the government frowns on having an unfair playing field. Does anyone remember what happened to Martha Stewart?
The assumption that is placed on the investor is one of greed. If I can promise you an above average return, or the slight possibility of above average return, then that is sometimes enough to provoke an uneducated decision. The popular thing to do is whatever is “hot” right now, not what is prudent. Does that magazine writer know what your investment temperament is? Is he willing to sit down with you to explain why his prediction did not pan out and you are left with 20% of the money you originally invested? I know that I may be a little harsh here, but it is YOUR wealth, YOUR future, YOUR peace of mind. DO NOT look for the quick buck or an easy fix. You do not need to know everything about investments, just a few of the right things.
Philip A. Guske