Tips Are Good For You

During my hobby trading days (or my “young and foolish” days), besides using very rudimentary technical analysis, I would scour the Internet and try to hear from my other trading friends and acquaintances for tips, so that I could make a quick buck from the stock market. Sometimes I make, sometimes I lost and sometimes I would just break even.

When we received a tip while trading or investing, chances are that it will be met with positivity; who would not want a money-making opportunity, right? And with this euphoric thinking, most caution would be thrown into the wind and the rush to capitalise on the tip is very likely.

I believe some of us had been through what I had described above. Of course, after a while, I had realised how dumb it was to chase after non-guaranteed tips and leads.

Having said about how bad tips were, you may be wondering by now about the choice of title of this blog post. Yes, tips are good for you. Allow me to share why this is so.

Tips Could Provide A Spark

At times we are so engrossed with our own thoughts and points of view that we failed to see things outside of our own “box”. Tips, whether intentional or not, could give that “spark” that brings you out of the said box. All you need is a tinge of open mindedness and some inquisitive nature. 

When presented with a tip, do not just think about how it can make you money, but rather think about why the tip is mentioned as such. If you go along this line of thought, you will probably see a whole new dimension that is related to the tip. From there you can then capitalise on it and start to make some money.

When the United States (U.S.) Federal Reserve was starting to raise interest rates a couple of years ago, there was talk of buying up local banks as a rising interest rate environment was profitable for them (Note: if you want to know the relationship between the U.S. interest rates and Singapore’s please read here). With this tip, not only I had looked at the three local banks, but also the three local finance companies as well, since they were in the same sector/industry.

Tips Come From Unusual Sources

Sometimes tips could just come from the most unusual sources, and a keen eye and ear are all that is needed. Being observant is key in this aspect, though you do not really need the super sleuth skills of Sherlock Holmes to achieve that.

First to start off would be the everyday things that we take granted for. What is the brand of your mobile phone? Which brand of handbags that you see most common while commuting to work? What are the companies’ names emblazoned on the sides of the rubbish trucks that ply the streets everyday? Which brand of toiletries that your family uses? Why do we mostly see a lot of MacBook users inside Starbucks?

All these questions can be developed further and in detail. Who knows, you might be able to get something out of these prospects.

Tips From Professionals

I believe you may have received emails of analyst reports and daily updates of the financial markets from your brokerages (if not, give them a ringer. They will be glad to provide you). If you have multiple brokerages, it is even better, for you will get different opinions of the same company or current market/economic situation.

While the reports are written by analysts and economists who know more of the economy and financial markets than you and me combined, the truth is very clear; no one really knows what the future holds. So now the question is, if their estimated guesses (or guesstimates) are as good as anyone’s, why do we need to read them?

The answer is simple. Typically analysts and economists are privy to information that we ordinary folk have little access to. For analysts, they are being invited by (or invite themselves to) the companies, where they could see things first hand and hear things from the horse’s mouth. For economists, they have the necessary modelling tools and techniques to come out with a guesstimate of what is to come.

With the published reports, updates and viewpoints, you can combine them with your own opinions and findings, and decide from there.

Conclusion

The ultimate result is to have tips from the above three sources, plus your own, to give you a (the best you could) full picture of the whole scheme of things. The only major concern is information overload, which may lead to confusion (especially with differing opinions) and/or selective bias (picking opinions which you agree with and diss the rest).

Still, as I had said time and again, we cannot tell the future, but a decision based on guesstimates stands a better chance than pure guesswork, or guesses based on groundless tips.