I’ve only been investing a short time but as I’ve been trying to learn what I can about dividend investing, I’ve been coming across many posts and tweets regarding what stocks to buy. What I haven’t seen is how to decide which stocks to buy. It would go a long way if those that post stock recommendations would also give an explanation on how and why they come to recommend that specific stock. There’s an old saying:
Those people posting their stock recommendations without any explanation or method of how they got there are giving out a “fish”. Some people will blindly follow but never know why. Their only reason for selecting that particular stock is that “someone recommended it”. Hmm. How does that help you go forward? How can you move forward to deciding which stocks to invest in next? How well do you know the person giving the recommendation? What is the recommender’s agenda? Lots of questions come to mind.
We also have those that recommend lists of stocks to watch. Watch for what? What are we supposed to look for? Why should we be watching these stocks? Again, what is the poster’s agenda? When I get recommendations from my broker/financial advisor, they are based on my financial goals and broad selection criteria. Without an explanation of how they came to recommend these specific stocks you could miss some opportunities because you may not be looking at the same things that they are because their strategy is different than yours.
But if you give people the methodology of how you came to recommend these stocks you now are at the point of “teaching to fish”. Because now they can try to replicate your steps and maybe modify them to their strategy and decide on their own which stocks to buy. Telling me to buy a specific stock because it pays extremely high dividends is not useful by itself. There is more to my strategy than just dividends paid out. I’m not a one dimension investor.
Whenever I see the stock recommendation postings I always wonder “What is the poster’s agenda?” What are they after? I won’t recommend stocks. I will, however, detail a decision that I made about a specific stock or between 2 different stocks. I’ll explain what I looked at and what data was important to me and how my decision falls within my investment strategy.