Reader: “A senior of mine at work told me about your blog when we chatted about stocks. I mentioned Hock Lian Seng and he said AK blogged about it.
I bought this because my broker told me it was worth at least 69c and that there was a special dividend. I paid 62c but the price has plunged.
I wonder if I should hold or sell or buy more. If you are wondering, I just started investing this year and I don’t know who to trust now.”
AK: “Trust yourself. Trust no one else, not even AK. I have nothing against your broker and I think I know which brokerage he is from but don’t trust him either.
Don’t rely on others for investment tips. Buying something because it was a hot tip could end up burning you.
You have to have an idea of what you are looking at and how much it is worth. Only then would you have an idea if the price makes sense.
If the price doesn’t make sense, is it because it is too cheap or too expensive? Then, you will know what to do.
Having said this, as investors, we cannot expect a 100-percent hit rate. If we can be right more often than we are wrong, we should be happy.
Sometimes, we can do all the research we could possibly do, be reasonably confident and still be wrong. The only one who is always right is Mr Market.
You might be interested in this blog post and pay attention to the broker’s recommendation.
Those who bought then and bought more as the price declined would be bleeding badly.
If you are not prepared to do some work as an investor, it is better for you to stay away from the stock market.”