It seems that every week, we get a post on this sub saying that stock picking services and articles are bunk, with arguments like “if they knew what was going to happen they wouldn’t tell you” or “why would such a good investor bother writing articles ... they must be so rich.” This argument is always so frustrating to me, and here’s why:
First, giving stock advice doesn’t mean that someone purports to be able to predict the market. There are plenty of writers, sites, etc that offer advice on stocks that they think are going to do well, but they often make clear that there are risks and that they can’t guarantee performance.
Second, these posts assume that in order to give valuable advice, one needs to be a savant that can perfectly predict the market. In reality, even the best stock pickers get things wrong, and there are economic conditions under which talented pickers will lose money. Choosing to have an alternative source of income doesn’t mean that one does not have a valuable perspective.
Third, the majority of people giving investment advice don’t have the ability to move the market. With a few notable exceptions, there is so much noise out there that the average investor could not plausibly move the market without insider information. And, even with the bigger services like Motley Fool, who often do move the market, the “winners” that they pick are winners because they result in sustained gains over a long term period, and not just 5% in a day.
The better way to look at it is this: stock advice is a great way to find new stocks and to get another person’s perspective on particular equities. You shouldn’t trust one person’s viewpoint, both because you don’t know them and nobody is right 100% of the time, and should do your homework to verify a given author’s analysis and to find alternative viewpoints. And take promises to make you a millionaire or to deliver certain gains with a grain of salt. Do your homework, have reasonable expectations on what you can achieve, and be patient, and you’ll be fine.
But the idea that investment advice is necessarily useless is such an overdone trope on this sub.
Submitted January 10, 2021 at 11:48PM by gpsrx https://ift.tt/3bwfqIH
