Stocks

Philip Carret: Why Investors Should Avoid Stock Tips

In his great investing book, The Art of Speculation, Philip Carret provided some great insights into why investors should avoid stock tips, saying:

Q3 2019 hedge fund letters, conferences and more

Stocks

geralt / Pixabay

If a trader could select the stock which is to be the star performer for the next week or two, take his profit on that and move on to the next, he would actually find the stock market the road to fortune that many people think it is. How shall the trader select of the thousand stocks traded in the one issue which will have the largest movement in the next week or two?

Nothing short of omniscience will enable him to do it. Yet this is exactly what thousands of traders are constantly trying to do. Impatiently they jump around from one stock to another taking a small profit here or a loss there and doing no better in the long run than make commissions for their brokers.

A psychological factor here enters. Having no sounder reason for his purchase than a tip the average trader has little courage and is easily frightened into taking small profits. On the other hand, he is stubborn enough to feel that any stock he has purchased must at least be worth what he paid for it.

He is likely, therefore, to hold on grimly in a declining market and at the end of the year find that it took a good many five or ten-point profits to offset a few twenty and twenty-five-point losses, commissions, transfer taxes and interest charges.

For more articles like this, check out our recent articles here.

Article by The Acquirer’s Multiple


X
Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Are you an intelligent investor?

ValueWalkPremium is a website and newsletter for smart investors like yourself. We focus on the latest hedge fund industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers

0