The investor should not be drawn into investing in the latest hottest shares, the “whisper” shares. These frequently turn out to be no more than hope and thin air These shares rise in value astonishingly quickly, but there is nothing astonishing about their subsequent spectacular drop in price.
There are constant whispers circulating about the latest craze, whether it be jungle remedies to cure all ills, high-tech start ups, or bio-technological miracles, lithium or blockchain, and it can be very tempting to join in.
On the face of it, these new companies are on the brink of solving the world’s major problems. Often, or more accurately usually, however there is no substance behind all these rumours and the stock-picker can leave his brain outside because he does not have to spend time checking earnings and so forth because usually there are no earnings.
Figuring whether the PER is acceptable is no problem because there is no PER ratio. But there will no shortage of microscopes and high hopes.
These fads are always with us – just look at market history. For example, in the 1980s Peter Lynch’s favourite story is a company called KMS Industries, which between 1980 and 1986 engaged upon various technological ‘miracles’, such as ‘amorphous silicon photovoltaics’, ‘video multiplexer’, ‘optical pins’, ‘material processing using chemically driven spherica.…To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Prof. Glen Arnold
I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author.
Originally, I wrote all my ideas out in full on this website. Now that ADVFN publish them they are entitled to display the full version for six months – you can see them here. Thus can I only post the first few paragraphs here for anything younger than six months.
I write 2 to 3 newsletters per week - investing is about making the right decisions, not many decisions.