It is a common experience that the retail investors are wary of the stock tips. The main reason being the experts is bias towards BUY recommendations. This is so because of the inherent business interest of the experts firm. Most of these advisory firms are also in other business which links them to the firms that they are talking about. It is but obvious that you cannot give the share tip to sell when your revenues are dependent on that same company. Its very hard to be objective when dishing out stock tips. In Indian share market it is more so because many advisory firm are siblings of the same group. A group which runs a bank also runs a securities or brokerage wing. Can you imagine security analyst of that firm talking negative about the functioning or stock of that bank. This is where the very objectiveness required in providing stock tips gets buried. What we get are therefore more than 95% buy calls. And therefore the market even never teaches the retail equity investor to short the stock or the market. So the BIG names in Equity advisory are there for their own business interest and are compelled to forget the retail, small investor. They are competent but the intent is missing.
What are the alternatives for retail equity investors?
The best is to become a pro or at least an amateur analyst on own. Technical analysis of stocks or fundamental analysis is an art and science which can be learnt, no doubt. But the effort is required. This handicaps many.
The second best alternative is to find a stock advisory service that is doing nothing else. Most probably it would be a smaller firm. But they will maintain the objectivity required for a retail stock tip. What really needs to be confirmed is their competency. Now, how to go about it?
Most of these firms publish their accuracy reports. Secondly most of them publish their daily, weekly and monthly calls on their websites. One needs to track them for a month and so and then get attached with them. The fees they charge are small. The risk is not the fees but the money you will loose because of wrong stock tips . Here your tracking of their website plays the major role.
In addition one can also look into their other reports and publications. What else is on the site? How intense is the research? How much they update. The updating speaks volume of their team. The quality of other reports does the same. How innovative their other reports are. Are they doing some things different for retail clients or they are one among equals?