Never ask a barber if you need a Haircut (Hint: Barber = Broker)

Never ask a barber if you need a Haircut
Img - belmontbarbershop.com

“Never ask a barber if you need a haircut”

He will always try to make you feel that you need a haircut because that’s how he will earn.

Same as – Never ask a broker if you want to transact in the stock market. They will always find out the reason for frequent buying & selling because that’s what fills their pocket.

More you trade, more they get.

They will never look at fundamentals for this cause because fundamentals remain same for long then how will they validate their point of selling/buying based on some changes in the market.

Technical parameters changes days to day, even minute to minute. Here they got the point to show you some changes eventually changing their buy/sell signals.

I too receive many calls from advisors, brokers etc (don’t know from where they got my no.). They all have one thing in common – They are good at cooking things.

They want you to trade, so they will always figure out the ways to make you do that. Their profit doesn’t depend on how much you earn instead on how much you trade.

Warren Buffett made a statement in 2008:

We are certain, for example, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.

Now see how Warren explains the thing in next year (2009) Annual Letter that – how the rumor makers in Wall Street the cooked the story.

Image read (with breakdown):

Last year we saw, in one instance, how sound-bite reporting can go wrong. Among the 12,830 words in the annual letter was this sentence: “We are certain, for example, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.”

Many news organizations reported – indeed, blared – the first part of the sentence while making no mention whatsoever of its ending. I regard this as terrible journalism: Misinformed readers or viewers may well have thought that Charlie and I were forecasting bad things for the stock market, though we had not only in that sentence, but also elsewhere, made it clear we weren’t predicting the market at all.

Any investors who were misled by the sensationalists paid a big price: The Dow closed the day of the letter at 7,063 and finished the year at 10,428.

What I want to say is – Brokers etc doesn’t need any news to form their buy/sell signals.

However, many big broker players have their own team of analysts which recommend their buy/sell signals. Most possibly, based on Technical parameters.

About Sowmay Jain 59 Articles
Hello! I’m from Hub of IT (ha!) Hyderabad, India. I work full-time from home, making a living from my blog and another dynamic medium from my investments. Like so many other people, I’m on my Plan B career. At the same time, I share ideas and techniques to help my readers in mastering stock market and overcoming losses.