THOUGHT FOR TUESDAY 13 MAY 2008
From top share author MALCOLM STACEY
Hello Share Mates,
Shares can be talked up. If a big wheel in the City makes a pronouncement about the prospect of oil prices rising, it can become a self-fullfilling thing. Sometimes, a forcibly expressed view on these lines can cause a fast result for the share price.
There is nothing wrong with this. Eventually, the cold light of day may dawn and the shares will go down again. But they won't fall if the pronouncement is correct, or even partly true.
And you might make money while the share is at its zenith, if you sell at the first sign of weakness.
I think it's often better to listen to experts, than dismiss their claims too lightly. I don't really think someone with big clout in the city would risk their reputations by saying anything reckless.
Am I getting soft? I don't think so. I am no push over when it comes to believing everything I hear, but I still think there is an element of truth in most things that are said in the City. The fear of failure - by saying something that goes very pear-shaped -is a good brake on the making of stupid guesses.
There are of course the rare cases we hear about where malicious rumours are started just to make a fast buck. I hope the FSA comes down hard on people like this and throws the book at them.
And yes, I have no doubt that there are people with less-than-brilliant morals in the City. It's just that most folk I meet there are straight-down-the-line honest. But be on your guard anyway. I have been caught once - a currency trading scam - but that was a long time ago, and once bitten once shy.
Always remember, gang that if something looks too good to be true - then it probably is. Yet don't let a fear of being swindled stop you listening to everyone. There are many experts in the City who are usually right and if you regard what they say, still with a fairly critical ear, you might do better than trying to work alone. Rock on.
UKSA is the leading independent organisation for private shareholders in the United Kingdom. It campaigns to protect your rights as a shareholder and runs educational activities for members.
