The question in the title popped into my mind as I spoke to a bunch of friends, some of whom were veteran investors.
I noticed a tendency for investors to not only ask others for investment advice and recommendations, but to also act upon these recommendations without doing much due diligence themselves. This occurred even with experienced investors as well.
I believe there are three principal reasons for this behaviour.
In a hectic society like Singapore, most people are burdened with work, family commitments and household chores and therefore, may not have much time for themselves to relax, much less think about and analyse investments ideas.
Laziness is one of the major reasons for people to adopt a “crutch mentality” and rely on friends or peers for investment recommendations. The right thing to do would be to allocate around half an hour out of your busy schedule daily to read, think about and review investment ideas. Taking ownership of your portfolio shows that you are serious about investing and forces the mind to focus on what’s really important.
Trust And Convenience
Another major reason for relying on others is because we trust certain friends who may be more experienced or knowledgeable than us in the area of investments. These friends may be more dedicated, have better analytical skills or boast an enviable track record of performance. It is therefore convenient to place reliance on their superior insights to carry out investment decisions, especially if you have known them for many years. However, one’s own investment goals and philosophy may be totally different from these veteran investors. Blindly following them and relying on them may be detrimental to one’s portfolio performance.
Lure Of Easy, Quick Money
This is probably the worst reason of the three.
Investors who go around asking for advice thinking that it offers quick and easy money are treating the stock market like a casino or lottery. They use others’ ideas as a quick fix for their own insecurities, lack of knowledge or lack of drive. Such an attitude will only result in losses over time as such investors muddle about without any purpose or focus.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.