I believe most of the people in my surrounding know very well that investment is my first love. People have known me for my market-passion and the way I’ve grown in this journey of mine. I love to cater to my friends’ queries when it comes to understanding the market and the investment methods I apply (with whatever little knowledge I do but they have proven to work well for me at least by now). My knowledge is acquired since my college days wherein I began to learn of investment & share-market via a gaming trading platform.
These days, I’m observing a strange tendency of communication from my known-ones to me. I’m getting a lot of calls/text messages and Facebook messenger pings from the people in my family and friend circle asking what company’s share they should invest in. During this market panic they want few short term recommendations from my side to gain some profit out of the situation. Regardless of the fact that I’m a long-term investor and don’t believe in running after any company’s dip or rise in such short term tenure.
“There’s a saying in the market – one size does not fit all.”
While my investment picks might suit you perfectly, they may not make the cut for you. Why??
Because both of us have different behaviors, different risk taking abilities and lastly, different family conditions.
You Approach me with a Fear of Missing Out (FOMO)
Most of the times people approach me trying to invest into share market so that they don’t feel like missing of the opportunity. I would want to ask a single question to all of those investment seekers, “Why do you want to invest NOW?” Were you following any list of shortlisted companies for you? Did you read about the companies’ fundamentals? Did you do your research on how the company wants to shape the business in future? Do you assess the business longevity and relevancy in the market? What segment of business interests you, which you would want to read about?
If any of these questions give you an answer as a “NO”; you don’t really want to invest in a business and become a part of it. Instead, you just simply want to copy your friend’s profile thinking you’ll make the similar profits.
Also Read: What You Need to Know Before Buying Stocks
Do you really think it’s possible? I might have kept XYZ Company under my To-Buy radar for more than few years. I might be following the company’s & its promoter/director’s every now-and-then moves closely. I might be reading their annual and quarterly submitted reports to convince me to buy them. I might have bought the share at a price which was suitable in that time-frame and is not valid now.
And the most important thing, I’ve got into the share buying with a long-term view to earn profit. You might want to sell it in a month or so, which obviously won’t give you the similar results of gain. Then why do you want to get into this just for the heck of buying? Do your own study & research and make your own decision while buying/selling a share.
Always remember, “Investing Is a Single Player Game; Thou shall not have an investment team”. The stock tips can result into blame games and cause more harm than good.
Novice Investor: My Advice would be to go for a Monthly SIP
Mutual funds, NEXT NIFTY 50 and Index funds are few options that a beginner can start their investment with.
Mutual Funds are advantageous for the new investors as they allow you to get the returns of an entire section of the market without having to invest via buying and selling in individual stocks. Which requires you to put a lot of efforts while reading them methodically.
To learn about investing in shares, you need to research each of the selected companies. You must comprehend their financial reports. Financial reports give a brief of how much money the company is making and what approaches it is using to grow their profits. You also must be aware how the economy is doing and how that will move the company and its business. Except you do all this homework, you won’t be able to select fruitful companies.
Mutual funds don’t need as much time to research since the fund manager does that for the investors. But you need to study the past performance of the mutual funds and then decide onto your investments. But in either of the cases, you cannot deny the fact that you need to know how the economy is moving throughout the country and the world as a whole.
Also Read: How to Keep Investing during Panic
To sum up, I would just say it is no-way wrong to ask for stock ideas/tips from friends.
However, it is important to take such advice with a skeptical mind and do your own due attentiveness. It is pointless to play the blame game in future if things go south because you only are responsible for your own monetary decisions at the end of the day.