Read on Twitter
You see all different opinions on stocks on Twitter.
People will show you their portfolio.
People will recommend stocks that they have made money with.
But what does that mean for YOU?
"Why you need to do your own research"
A Thread
People will show you their portfolio.
People will recommend stocks that they have made money with.
But what does that mean for YOU?
"Why you need to do your own research"
A Thread
1.
We all want to feel like we are making the right investment choices.
When you consider that the stock market is so crazy at times, it's easy to be insecure about the choices we are making.
This makes it tempting to look to others.
We all want to feel like we are making the right investment choices.
When you consider that the stock market is so crazy at times, it's easy to be insecure about the choices we are making.
This makes it tempting to look to others.
2.
However this is often a costly mistake that can easily lead to losses.
This is because everyone's investing situation is different.
Different how?
Well, let's look at a few of the different ways.
This will show you why "copying" others is a fool's errand.
However this is often a costly mistake that can easily lead to losses.
This is because everyone's investing situation is different.
Different how?
Well, let's look at a few of the different ways.
This will show you why "copying" others is a fool's errand.
3.
First, just because someone owns a stock - doesn't mean it's a good idea to buy shares NOW.
Someone else might have been already holding shares for a long time, and have a much lower cost basis than what you are going to get at current prices.
First, just because someone owns a stock - doesn't mean it's a good idea to buy shares NOW.
Someone else might have been already holding shares for a long time, and have a much lower cost basis than what you are going to get at current prices.
4.
Second, you will probably not have the same investment goals as someone else.
If someone says "I have shares in $XOM".
-Are they holding for the long term?
-A short term trade?
-Is this an income investment where they aren't worried about share price?
Second, you will probably not have the same investment goals as someone else.
If someone says "I have shares in $XOM".
-Are they holding for the long term?
-A short term trade?
-Is this an income investment where they aren't worried about share price?
5.
Third, if you are just blindly buying a stock based on someone else's recommendation, you are flying blind.
If a situation arises that changes the investment case around that stock, how are you going to see it coming?
You might get stuck with losses.
Third, if you are just blindly buying a stock based on someone else's recommendation, you are flying blind.
If a situation arises that changes the investment case around that stock, how are you going to see it coming?
You might get stuck with losses.
6.
Fourth, a person recommending a stock might be trying to manipulate the share price.
They might be looking for amateur "suckers" to move shares one way or another to take advantage.
It's unfortunate, and slimy - but it does happen.
Fourth, a person recommending a stock might be trying to manipulate the share price.
They might be looking for amateur "suckers" to move shares one way or another to take advantage.
It's unfortunate, and slimy - but it does happen.
7.
All of these reasons underline why it's so critical that investors do their OWN research on stocks.
You need to make sure the fit, valuation, and investment case all agree with your investment strategy.
All of these reasons underline why it's so critical that investors do their OWN research on stocks.
You need to make sure the fit, valuation, and investment case all agree with your investment strategy.
8.
Will you always be right?
No. However, this is a learning process and these experiences will only make you stronger as an investor.
Will you always be right?
No. However, this is a learning process and these experiences will only make you stronger as an investor.
9.
Copying someone else's investments is like copying answers for your homework.
Eventually you will either get caught, or copy an idiot's answers!
Please establish your own investment strategy/process - and then follow it!
Copying someone else's investments is like copying answers for your homework.
Eventually you will either get caught, or copy an idiot's answers!
Please establish your own investment strategy/process - and then follow it!
10.
If anyone is looking for help establishing their own investment process, feel free to DM me!
In the meantime, I can be followed at @theefinanceguy.
Retweet to help a friend
If anyone is looking for help establishing their own investment process, feel free to DM me!
In the meantime, I can be followed at @theefinanceguy.
Retweet to help a friend
