Thursday, April 21, 2011

Recommendation: Buy

Hey there,

I have just come back from a talk given by a few people who used to work with the Medecins Sans Frontieres or MSF or Doctors Without Borders and I have to say the stuff that they do are crazy. Humanitarian work, especially in conflicted areas, I don’t know if I can handle doing such a thing. It is one thing to read about it or watch about it on the news but it is a whole different story when you’re actually there.

I guess the way I see it is that I came from Malaysia, to Australia to get all the perks that comes with a 1st world country, basically a good life. I’m not saying that Malaysia is a shit place to live, Malaysia is one of the best countries in the world, but it has its bad points. Now that I’m in Australia, I wish to work here and gain access to all the goodness Australia has to offer. Really, some of the “issues” Australia face, or problems that they bring up in the news almost seem trivial in the grand scheme of things.

If I ever do humanitarian work, I’ll go back to Malaysia and give back in whichever way I can to the country that I love and grew up in and trust me Malaysia needs help.

Anyways back to investing, so how many of you actually bought a share because you read about it in a report sent out by your broker? I am with ComSec and every few weeks, they send out an email with a list of companies that they think you should buy, hold or sell. For some reason the company that they put a buy recommendation on, always have a target price that is really close to the current price. For example, XYZ, recommendation, buy, target price, $1.50, last price $1.30. What about when the price was 1 dollar or 90 cents? Was it a buy at that price as well? Or was it hold? Or sell?

I think it is important to remember that it does not really matter if the market is good or bad, if we make money or lose money. As long as we make a trade, the broker makes money. So will they make more money if we buy at 1.30 and sell at 1.50? I think yes, significantly more than if we bought it at lets say 1 dollar.

Another thing to remember is that if ComSec as a company bought XYZ at 1 dollar, and identified that it is time to sell at around 1.30 or 1.50. They can then write an article about it, put a buy recommendation at 1.30, encourage people to buy it, while they are dumping the shares, making a healthy profit.

I don’t know, I’ve never worked in a brokerage firm or ever studied finance or commerce in school lol. But let me know what you think, especially if you work for a brokerage firm. When do you send out buy recommendations? And if you are a trader or investor, have you ever followed their recommendations? What happens after you do?

Thanks for reading, do drop me comments or emails. I’m more than happy to read them. If you like this site, please click on the little like button on the right side of the screen to like the page on facebook or follow me on twitter.

Happy Easter everybody!!!

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