Strategy 6: Conflicts of Interest are Investors’ Enemies—Avoid Them!
Most people looking to make a major purchase, such as a home or automobile, don’t base their decisions solely on the advice of the commission-based salesman. Usually, they seek outside independent advice. It’s simple common sense.
The same type of common sense applies to investing decisions. Whether it’s the fickle market commentators trying to make headlines (sometimes at the expense of providing unbiased information) or Bursa Malaysia analysts for example tailoring their recommendations to benefit valuable corporate clients, we as investors must be wary of every word we read.
Here’s why…
Every brokerage firm in existence derives much of its revenue from investment banking operations. Such is the case, public companies often seek out brokerages whose analysts give them favorable coverage. And though not every investment banker is unscrupulous, the structure of the system creates temptation—a recipe for disaster, in our opinion.
You don’t need to search very long to find investors who would agree.
Biases and inefficiencies have been witnessed time and time again, and there is no guarantee they won’t continue to burn investors.
