Tuesday, November 27, 2007

Do financial experts really help you to take an informed decision?

ABC* is on a roll since the beginning of the second quarter of the current fiscal year. The stock witnessed sharp volatility in the last few days, though it gave up most of its gains. Technically, the stock is showing signs of good movement in the short term, but I think with a long term perspective, there are better bets available in the market.

I thought I understood that. But did I? Please help me what did the "expert" mean by those simple sentences. Let me try to deconstruct those simple lines.....
  1. On a roll: I think this stock is rocking, buy!
  2. since the beginning of the second quarter of the current fiscal year: Oh, it is a recent phenomena and what happened before that, we don't know. Doubt!
  3. sharp volatility: looks scary.
  4. gave up most of its gains: Bad, I have to rethink whether the stock is rocking!
  5. showing signs of good movement: Good, after all it's a Buy recommendation after all.
  6. with a long term, there are better bets: Doubt again about the stock.
The expert has done his job. He has told me nothing and still is called an "expert". Moreover the leading daily also warns you that they are not responsible for your decisions.

There is a bigger issue of the subprime mess. Is there some accountability for the top dogs of financial services industry, the highly rated experts, who are responsible for the crisis?

*ABC is a stock which is real and the recommendation as above is verbatim.

What they teach you is to "Take responsibility for your own financial decisions"

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