DIY Investor Magazine
/
2015 Issue
16
DO YOU TRUST TIPSTERS
OR BROKER NOTES?
It starts with a question: Who do you trust with
your money and why do you trust them? Do you
hand over a portion of your hard earned salary
every month to a fund manager hoping they will
work hard to protect and grow your investment,
maybe you trust those cold calls saying, ‘Hi,
have I got a great investment opportunity
for you!’; perhaps you do your own research
based on hours looking for investment ideas in
newspapers, magazines, websites etc. trusting
yourself and the tipsters or maybe you just
listen to your friends or your wise granddad?
Who knows? But the reality is that someone
somewhere is giving someone else advice about
which stock to buy and why they should buy it.
Many investment decisions made by retail
investors start with a tip whether it be research,
a chat over a glass of wine or an article in a
national publication or website.
For me it is about drawing on the views of
experts but doing a bit of research myself.
What follows is the story of what led me to that
conclusion.
A few years ago I had a call from the local
branch of a well known advisory stockbrokers. ‘I
have a great stock for you to invest in’ said the
broker and then explained what it was and told
me that the buy note had come from their highly
rated research team. The net result for me was
a £40k loss and a very, very painful lesson in
investing. A short while after I bought the first
£20k of the stock it rose by 25% so I bought a
further £20k. A week later the stock went into
administration citing cash flow due to loss of a
major contract.
Bang all gone. While many investors no doubt
receive very good advice, I’am sure I not alone in
this story.
I was always told to invest, but invest wisely! Well
what does that mean when I haven’t even got time
to go to the gym let alone sit at home researching
how to invest what’s left of my hard earned salary?
I had a few choices: either invest myself and do
my research thoroughly or give my hard earned
cash to someone who knows what they are doing
or do a bit of both. So for me now it is about doing
a bit of both.
Acknowledging the risk warning that part
performance is not always an indicator of future
success, I have made my personal investing more
controlled and fun as I only invest in funds or
equities that I know the tipsters or fund manager
has a quantifiable track record they can show me
and that this record is totally transparent including
the dogs they have picked too.
I don’t invest on the basis of calls from brokers
selling me the next big stock tip unless they
can demonstrate to me the track record of
the researcher. Brokers rarely publish the
FULL unedited track record of their in-house
researchers. I believe that they should, as the
cream rises to the top!
Investing should be exciting and therefore fun, so
how can investors level the odds of success?
Well what I do is invest with people with a
track record of success. In response to my first
experience, I kept looking for the right people
making recommendations, with the right track
record to invest in.
PAUL ROBERTS, CEO STOCKOMENDATION
LET ME EXPLAIN WHAT LED ME TO SET UP THE UK’S ONLY STOCK
TIPS AGGREGATION AND COMPARISON SITE
