stock advance - Information as part of stock advice5. Nature of

INTRODUCTION: Stocks are one of the most profitable all time investment avenues. It can make an investor super wealthy in a matter of days. But it can also turn a wealthy investor into a pauper in just about the same time. Investment in stocks is highly speculative in nature.

The stock market fluctuates, sometimes mildly and sometimes wildly. This fluctuation in itself is the underlying principle of the stock markets functioning.

NEED FOR STOCK ADVICE: Stock prices of one company may be high on a certain day. But it can plummet down the next day or even in the course of a few hours. So it is important for an investor to be well advised and informed about the market and the stocks he plans to buy or sell. Advice about investment in stocks comes from brokers, and other assorted professionals like economists, market watchers, bankers, financial consultants, investment advisor, financial advisor, financial planner etc.

Although nowadays, we find free stock advice from various sources like the financial page of newspapers and magazines, financial journals, television programs and on the internet, they are of a generalized nature and not always close to accurate. It is advisable to go to a professional advisor for specific stock advice. These professional stock advisors measure the performance of stock markets through various recognized indices, indicators, scientific yardsticks and computer programs.

For an investor, making his first foray in the stock market, it is important to remember that most stocks carry an element of risk in them. Even big cap or blue chip stocks are not totally exempt from this risk factor.

While the primary aim of the investor will no doubt be to make profits on his investment, a secondary aim which is equally as important would be to minimize his risks. While such risks can not be eliminated totally, sound stock advice can help to minimize it to a great extent. Although such stock advice comes for a price, it is well worth the expense because good stock advice can go a long way towards building a fortune out of stocks. Similarly poor stock advice can invite downfall in no time. And for an investor who goes into stock investment without any stock advice at all, the situation is akin to going to war without the necessary arms and ammunition.

WIDE SCOPE OF STOCK ADVICE: Stock advice encompasses a variety of areas. It is not only about the stocks or the company whose stocks an investor plans to buy. It is other related information as well.

INFORMATION AS PART OF STOCK ADVICE: Incidents whether local or international, which may have a major bearing on the performance of a particular stock, should be taken into account while trading in stocks. Trade and finance closely bind almost all the countries in the world in one big relationship and interdependence. A crash in a major stock market in one part of the world might bring down a crash in the major stock markets across the world.

Similarly a war in one between two countries might affect the stock market in a third country. A war in between two Gulf States can seriously affect the prices of oil stock all over the world.

Inside information about a companys performance is also essential while trading in stocks of that company.

Likewise advance information about the governments change in policy in respect of a certain commodity can be very helpful information while trading in the stocks of a company that manufactures that commodity. Thus such information is an important constituent of any stock market advice.

NATURE OF STOCK ADVICE: Almost everyone knows that in order to make a profit, one must buy stocks when the prices are low and sell them when they are high. But it is important to be aware about the right time to make the purchase and also to sell. An investor might wait too long to buy and discover that prices have suddenly started to go up. Similarly he might wait a bit too long to sell to discover that prices have started falling. Here stock advice is necessary to make the transaction as close to the optimum time as possible.

Stock advice may also relate to the type of shares an investor should pick up. Some stocks might not perform too well at a certain point of time. But their performance can improve later. Similarly some stocks doing well at a certain time might nose dive later as in the case when the dot com bubble burst.

USING A BROKER FOR STOCK ADVICE: Some people prefer to use and pay for the services of a broker for stock advice, as they feel more comfortable taking decisions about their finance with the interactive guidance of licensed professional.

But while using the services of a broker for stock advice, the investor would do well to remember that brokers do get paid a commission based on the stocks or mutual funds they sell and also through operating expenses fees, service fees, shareholder fees etc. Here a conflict of interest arises concerning a stock broker who also acts as a stock advisor because their revenue is generated as a direct result of the investment in the stock or the mutual fund that they broker to an investor. Thus the return on investment might not be that great or the stock advice given to the investor may not be in his best interests.

STOCK ADVICE FROM BROKERS: Earlier only the wealthy could afford to invest in stocks as they had the means to access the services and get stock advice from brokerages. But with the advent of the internet, a new variety of brokers known as Discounted Brokers have appeared on the scene, they charge a very small amount of commission for their services but do not offer personalized service like stock advice.