I’ve been trawling through the in-tray from last year [email in-tray}. One theme that keeps recurring is Investment strategy. Some are quite funny. One chap wrote that he woke up at 7am to a terrible noise coming from his garden, at the time he was having a dream about encore oil. In the dream he was chatting with a wizened old investor who kept telling him of the “black gold”, any way to cut a long story short he went to look out the window to find out what the hell this noise was and there on his lawn were 6 magpies fighting; instantly he thought “6 for gold!” then placed an order for EO. Happily he got them for 69p. To be honest this kind of thing is more wide-spread than acknowledged. It’s like placing a bet on a horse because you like the name or the colour the odds are heavily weighted against you. It’s a disaster in the making.
There is NO Midas touch when it comes to investing but what you do need to have is a clear rationale when investigating/researching companies. It can become obsessive and emotional. In fact Behavioural finance , the psychology behind investing is now widely accepted and ALL financial houses,banks,funds etc study and employ behavioural finance techniques.
There are some very good articles online and I would urge investors to take an hour or two researching. The more one knows about how the market works and what pit-falls to avoid the less mistakes you’ll make. You’ll always make mistakes, we all do. It’s keeping them to a minimum that counts! Which brings me on nicely to a big mistake being made at the moment. What’s in a name? Well apparently about 1.30pence. Rare earth minerals have absolutely nothing other than a snazzy name (changed from Zest) yet the name conjures up feelings of potential wealth from???? Rare earth minerals! Lets ask a question. Zest failed miserably re’ the music business etc. What makes investors think that they are experts in mining or acquiring rare minerals? The psychology of this name is its only asset. Beware, investors are heading for a big fall.