share recommendations, themselves depend on others for it and do not understand the reason why the particular share recommendation will work.
Let’s take a look at an example of why one should never invest on the basis of random share recommendations.
Prashant was driving back home from the office with his colleague Suhass when his car sputtered to a halt.
“Oh no, not again. This car is giving me a lot of trouble lately” said Prashant with a dejected look.
“Well why don’t you buy a new one?” asked Suhass.
“I cannot afford a take a car loan now as I have many other commitments. Besides I will get only 2 lacs for this 8 year old car now so I have to chip in atleast 3 lacs more from my pocket” replied Prashant.
“Well don’t worry. I have a confirmed share recommendation .You can just sell off your car and invest this 2 lacs in XYZ stock. It is going to increase by 5 times in next 6 months as its biggest competitor is planning to take over it. So it you invest 2 lacs you will easily get around 8 to 10 lacs in next 6 months. I think you can easily buy a sedan instead of a hatchback with that kind of cash in hand” replied Suhass.
Taking Suhass’s advice seriously, Prashant sold off his car for 2 lacs the next day and invested the amount in XYZ stock.
After a month as a result of market correction, the stock lost as much 60% of its value. With this the total value of Prashant’s investment fell to Rs.80,000 from 2 lacs. Struck by panic he decides to check with Suhass.
“It’s going down continuously. What should I do now?” asked Prashant.
“Don’t worry it is just falling with the market correction. Just wait for 3 months and see it will not only bounce back but also give you 5 times return” assured Suhass.
After 3 months the stock price of XYZ stock fell further by 60% reducing the total value of the investment to Rs.32000/-
To save whatever was left, Prashant decided to sell off the stock and salvage Rs.32000/-.
The above story is nothing new. It has been played out countless times. There are thousands of Prashants out there who have been misled by the generic share recommendations offered by office collegues, friends, relatives, Whatsapp group messages and TV channels.
Stay Away From Free Share Recommendations
Most people have a tendency to invest in recommendations. However, what they fail to realize is that such share recommendations are incomplete and incorrect. In many cases, such share recommendations are deliberately shared by scamsters with a malicious intent of artificially manipulating the price and trapping innocent investors.
If you really want to create money from stock markets, ignore free share recommendations provided by self-proclaimed market experts. Instead, opt for share recommendations offered by a professional financial advisory service as they are best suited to offer you correct investment advice on the basis of thorough research.
Read more: How Long-term investing helps create life-changing wealth – TOI.