Sunday, 4 October 2009

Futile exercise to chase after bonus issues.

Summary:

Most of the time, such an action will lead one to make losses relatively and during bear markets it will lead you to make absolute losses.  But the most galling aspect of chasing after bonuses is that some of the time, one is being led blindly into traps prepared by crafty insiders or their friends.  In such instances, you are like innocent lambs led to the slaughter.  The chances of you losing a great deal of money is very real.

Since it is very difficult for you to know which bonuses are of the innocent variety and which are not, is it not better to ignore all of them?

The best approach to take is the fundamentalist one; only buy those stocks which provide you with a reasonable return and which have the prospect of providing a constant long-term growth in earnings and dividend irrespective of whether they give bonus or not. 

1 comment:

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