I have been reading the posts on one of the threads of a bulletin board, hosted by a popular UK financial website, with interest and alarm over the past few weeks.
The thread relates to a company that listed in the last year. The shares of the company have enjoyed a dramatic 3000% rise in value over this period.
Needless to say, the thread relating to this company has been very active as of late; as more people are drawn in by the idea of making a "fast buck".
There are a number of people posting on this thread who, by the grace of God, seem to feel that they have been gifted with second sight.
They routinely, via goat's entrails and runes (I assume), make bold predictions as to the upward price movement that they expect the stock to make over the coming days. In the last fortnight or so, as the speculative bubble begins to burst, these predictions have been wrong.
The price has started to dip, and there are a number of "investors" who (I suspect bought in at much higher levels) will get their fingers "badly burnt".
This is a more extreme example of the daily ebb and flow of share prices around the world. However, it serves to highlight a number of common characteristics of some "investors" and the "techniques" that they apply when investing money in companies:
In short it is apparent that these people have not a clue about what they are doing. They are no better than an ill informed, and reckless, gambler staking all on the spin of a roulette wheel.
My advice, for what it is worth, to those seeking to invest in companies is as follows:
Note that this advice is based purely on my own opinions, observations and experience. It is not exhaustive, and should not be used solely as a basis for any investments that you may be considering to make in the future.