Analysis of BL Reco on Nifty

[Prashanth]

Both Free and Paid recommendations in the stock market are available in large numbers. But how many really make trading / investment sense.

As a example, I am taking up this weeks recommendation in Business Line for Nifty.? Near month Nifty Fu... More (http://www.desitradermall.com/blog/2008/12/14/analysis-of-bl-reco-on-nifty/)

[rsi]

Prashanth,

A few points are to be considered here.

1. Who is going to trade as per the strategy advocated in these weekly newspapers? Mostly novices and more probably those who do not have any knowledge either with regard to technical analysis or with regard to money management or with regard to trading plan.

2. What is the qualification of those persons who write these columns in newspapers? What is their experience in trading? Do they actually trade or they just write columns in newspapers? I suspect the latter. Because they only give strategy of entry and neither risk management nor exit targets or at least exist strategies.

3. Newspaper column writers are searching some reasons to explain market movements. This is evident if you read any newspaper be it businessline or economic times. Their prime goal is to fill the paper columns and not to educate readers. I suspect more than 98% of these reporters/column writers do not have any knowledge with regard to market dynamics that is to say why the market moved in that fashion rather than explaining it with some naive reasonings after fact.

4. Many times (I should say more than 90% of times) you will find that market behaves just opposite to what is forecasted on newspaper or what is the 'reasonable" movement you expect after reading newspaper report. That amply explains the point that these newspaper reporters are "filling columns".

5. Has anyone made comparison what happens one week after a recommendation is made in newspaper? Has anyone made what happened immediately after publishing recommendation in newspaper and by the end of that trading day and after two or three trading days? Usually what happens is that if a stock is recommended as "Buy" in Sunday newspaper, on Monday morning, that stock will open gapup and stay there for about 15 to 30 minutes and then sink back sucking all those novices who thought that they can make some 'quick bucks' by reading Rs.4/- newspaper.

6. Funniest aspect is that all newspapers are busy in forecasting the markets, which experienced traders know very well that is useless and may be harmful. Novice traders donot take positions or take wrong positions after seeing these forecasts. You see this market constantly requires novices to donate money to the professionals. Newspapers are doing this service with great precision.

7. The newspaper forecasts are made using tools ranging from Idiot (err.... Elliott) waves to MACD, RSI, Stochastics etc. which are quite useless as you know.

8. Have you come across any newspaper which analyses the market based on price, volume and time data alone?

I never trade on what is recommended in newspapers nor do I buy their views. Newspapers should be just newspapers, i.e. reporting news as and when they happen, truthfully and unbiasedly. But I am sorry to note that expect doing this newspapers are doing many things else.

Thanks and regards