Thursday, January 11, 2007

Don’t buy somebody’s problem

A company with high gearing and no earnings and still in the red is somebody’s problem. Don’t make the mistake of making that problem yours.

One big advantage a retailer has is that he can pick and choose. If somebody ask you to join him in a business venture, you will have many questions to ask, such as: what is the business about; how profitable is it; who is managing it; who are its competitors, what are its concern; what are its prospective earnings and so on and so forth.

When you buy a stock, did you ask yourself all these questions or did you buy just on a tip? Amateurs, especially beginners are mostly consensus-takers. They will go around asking people what to buy. They will then buy what the majority agrees is a good buy. These people are going to lose get their pockets cut off, for soon they will find their money gone and that the majority is usually wrong.

The best advice I can give you is to do your own research. If you don’t have the time or the interest, better put your money in trust and not your trust in money.

Happy investing.