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Why following expert advices is risky for your investments?

Updated: Oct 2, 2019

Latest update: Check out our latest value stock pick: ITC here.

As an investor we often get overwhelmed by the different stock market recommendations coming from an array of fund management houses, market experts, news channels, websites and friends etc. All of this information is not only contributing to a lot of noise and conflicting opinions but also involves a lot of hidden incentives/perspectives for different people.

For an individual investor, following a stock advice blindly often results into definitive losses and hence I suggest investors to have a mindset of: "what all factors makes this stock an awesome investment" versus "what are the recommended stocks to invest in". Selecting the right stock and entering into it at the right time is something which requires skill (which gets developed over time) and we should not jump at shortcuts available to us without our own analysis.

A profitable investment is always backed by solid research, a well defined entry + exit plan from the stock and a cool mind. In this article we will discuss why we should do our own research and understand the logic behind investments versus just following advice from so called experts:

  • Stock markets are unpredictable, no one really knows where market or a stock is going to be exactly, because if anyone knows it, then he/she would put their own money in those stocks, become rich and won't need to write articles or come on news channels for money. Thus investors should not follow the advice of so called "market experts" without a solid research of their own. I am not asking you to stop listening to experts all-together, instead I am suggesting you to use these experts as just information sources to fill in gaps of your own analysis (or get a new idea). Before following these experts take a look at their previous recommendations as well and see if it actually materialised.