Breaking News:
Buy Co. X @ 105, Target 110, Stop Loss 100.
As a financial planner, it saddens me when people ask me the target price of a particular stock when they buy it. The biggest irony is when people ask me to suggest any stock for intraday trades.
Let us understand 2 things:-
Whenever an "analyst" suggests that the target is Y (say Rs 110 in the above case), he is doing so to create a demand for the stock which he can offload. Assume that I were that analyst and I have bought 1000000 shares of lets say Dabur @100. Now it is apparent that I cannot sell 1000000 shares at Rs 105 if I did not initiate that call. This is because when I want to sell 1000000 shares there have to be that many buyers as well. So in such a scenario if I am an analyst who appears regularly on TV, I could easily give a buy call on Dabur. This would make people jump on to the stock in the hope of making a quick buck. This would make it possible for me to sell my shares because of a hike in demand. I make Rs 5 per share on that transaction. I laugh all the way to the bank.
Now if Dabur touches Rs 110, the news channel would flash it as Target Achieved. And if it were to drop to 100 then they would flash Stop Loss Triggered. In either case the so called analyst has made his money. The people who have bought at 105 have taken the risk. If it touches Rs 110 , then the analyst becomes popular. If it touches Rs 100, people would abuse the analyst for maybe an hour or so and then forget about it because public memory is short lived. Even the analyst would not mind it because he has made his money and his next "tip" has a 50% probability of clicking.
So, what I would suggest is whenever you are buying any stock, please buy it for holding it for a short term. In case it shoots up on the same day, then you can book your intraday profit. If it does not then you are in no hurry to sell it because you have bought it out of your own money and not the broker's funds.
I hope this post helps you to avoid losing money. Looking forward to your feedback. In case of any queries please send them to vivekshah83ster@gmail.com. The whole objective of all the posts in the blog is to help each one of us to become money smart and not make ourselves financially vulnerable.
Have a great weekend!!!!
Your friend,
Vivek
Buy Co. X @ 105, Target 110, Stop Loss 100.
As a financial planner, it saddens me when people ask me the target price of a particular stock when they buy it. The biggest irony is when people ask me to suggest any stock for intraday trades.
Let us understand 2 things:-
Whenever an "analyst" suggests that the target is Y (say Rs 110 in the above case), he is doing so to create a demand for the stock which he can offload. Assume that I were that analyst and I have bought 1000000 shares of lets say Dabur @100. Now it is apparent that I cannot sell 1000000 shares at Rs 105 if I did not initiate that call. This is because when I want to sell 1000000 shares there have to be that many buyers as well. So in such a scenario if I am an analyst who appears regularly on TV, I could easily give a buy call on Dabur. This would make people jump on to the stock in the hope of making a quick buck. This would make it possible for me to sell my shares because of a hike in demand. I make Rs 5 per share on that transaction. I laugh all the way to the bank.
Now if Dabur touches Rs 110, the news channel would flash it as Target Achieved. And if it were to drop to 100 then they would flash Stop Loss Triggered. In either case the so called analyst has made his money. The people who have bought at 105 have taken the risk. If it touches Rs 110 , then the analyst becomes popular. If it touches Rs 100, people would abuse the analyst for maybe an hour or so and then forget about it because public memory is short lived. Even the analyst would not mind it because he has made his money and his next "tip" has a 50% probability of clicking.
So, what I would suggest is whenever you are buying any stock, please buy it for holding it for a short term. In case it shoots up on the same day, then you can book your intraday profit. If it does not then you are in no hurry to sell it because you have bought it out of your own money and not the broker's funds.
I hope this post helps you to avoid losing money. Looking forward to your feedback. In case of any queries please send them to vivekshah83ster@gmail.com. The whole objective of all the posts in the blog is to help each one of us to become money smart and not make ourselves financially vulnerable.
Have a great weekend!!!!
Your friend,
Vivek
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