Does That Guru Really Have the Juju for You?

Our Thoughts on Stock Advisory Services…

Some years ago, a friend of mine became convinced that a certain stock market guru had the right stuff for him. Most every time I was with this friend he gushed about his guru.

“He knows what’s going to happen with X stock. He called that one just right! He knew it!”

Such praises met me with such regularity that eventually I couldn’t help my curiosity.

When I saw this friend, I might ask something like “so what picks did you get this week?”

Some of the “picks” seemed to work out okay.

Once in awhile there were some flops and every now and then there was a good win.

Over time my friend (who was paying a weekly fee to the guru) became more and more trusting of the advisor and less interested in doing his own research and thinking.

He awaited with great anticipation the latest emails with the tips he so craved.

There eventually came a certain recommendation that was so sure to win that it was hard to ignore.

The story of this company was compelling and logical.

Updates about the company, its executives, new contracts, developments, and what was almost ready to happen came to my friend almost daily.

He put more and more money into this single trade, closing out other trades and investments to free up more cash.

Looking on it became alarming.

He would not listen to any of my warnings about balance or money management.

He was sure that his guru had the Juju and would carry him to wealth.

Another Direction

If you’ve been with us here at OnlineOption.com for a time you know that we are in dimetric opposition to the notion that someone else has the magic.

It is amazing to see how each individual trader applies correct principles to their own trading and investing circumstance. 

Our job, as we see it, is to bring to the fore the building blocks of successful individual stock market activity. 

In that regard, it is immensely satisfying and confirming to see members of our trading community profit on very different underlying tickers over a similar time frame while using very different strategies while holding to the basic principles of sound trading. 

You will not likely hear us saying something like “buy ABC between $2.00-$2.50 with a 30% target.” 

More likely you’ll hear something like “we are currently watching the ABC chart because…”

But I Want a Tip!

The easy way is so much, well… easier. 

That sounds self-evident but isn’t.

How often is the easy way really the easiest way in the long run?

It’s easy to not think, study, and decide. 

It’s easy to not bother going to school.

It’s easy to leave it until tomorrow.

But will the results of such a path make things easier down the road?

Nope.

But I still want a tip!

Okay, here are several.

  • Decide what you want, pay the price, and thus earn what you get.
  • In trading, if logic is made subservient to emotions disaster will eventually ensue.
  • Little by little the bird builds its nest.

The Rest of the Story

So as to not leave you hanging, I’ll finish the story I began with.  It turned out that the aforementioned guru had a plan.

He only pumped very low-priced stocks with low volume.

Having built up a very large subscriber base he would first buy into a relatively obscure stock and then “unveil” it to his followers.

Then he would pump it without mercy and very convincingly.

As his tribe entered positions, building demand for shares of the stock, the price was bid up.

The historically low volume greatly enhanced the effect.

When the price moved up high enough the leader bailed and moved on to the next low volume stock to pump.

Even though the share price of these tips cratered after he got out, the guru could point to the fact that the stock had indeed taken off after he revealed it.

Yes, he was eventually busted and taken off the virtual streets.

Now, this isn’t to say that all advisory services do this type of thing.

Many are not even allowed to buy or own the things they recommend by their publishers.

My hope though is that you now understand some of the pitfalls of relying on someone else to do the work for you because we believe there is a much better way and that’s what we’ve been teaching since 1999.

We also feel a good place to start is by reading our manifesto here.