Why Stock Market tips can never be right

This story is a amusing one. A La Rajkumar or Rajnikanth starrer.

First some brokers float the idea that a particular scrip is going great guns and in heavy demand. The first level bhakra buys a few and advices all the circle around. The multiplying effect gets all the bhakras actually fighting for one scrip. Naturally demand v/s supply story as told by Marshal takes over. The scrip sky walts overnight from 43 to 255.

The same broker dumps the scrip at 255 and laughts away to glory. If the bhakras are more englightened, they hold on for a day or two depending on their money lenders interest rate factor. Then slowly the first stage bhakras sell at 125. A few laught at this and say hold on.

Ultimately depending on what stage of bhakra you are – selling off determines your losses.

The moral of the story is all price movements are based on mass hysteria. Very simple law makes the finite count shares to be quoted at high rates due to this possible hysteria.

To beat this mass hysteria oriented falls, one is advised to research enough regarding the sector – preferabally for some cycles or years to get to know how that company fared. You probably have an answer there. You can short circuit yourself to this research by investing in Mutual funds too.

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3 Responses to Why Stock Market tips can never be right

  1. praneshachar says:

    all price movements are based on mass hysteria.

  2. praneshachar says:

    what a true satement on the stock market one sentence which in the previous comment makes it otherwise people can just go mad and harshad mehta bribe can make merry

  3. Praneshachar,
    Thanks for reminding me. Yes Harshad, Kethan all had the dubious disctinction of manipulating using the same modus operandi.

    The retail investors are so jittery..they ask.. whats this – there is no scam even after 7 years of ketan parkeh? Such is the power of this market hype.

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