It can be very difficult for a layman to know how the reserves of a company come into being. Very often such reserves are created at a stroke of a pen.
Unless you can separate the "good" reserves from the "bad" reserves, you should not be excited by the prospect of a bonus issue as a result of an increase in Reserves.
It is futile to chase up the price of shares based on rumours that a particular company is about to make a bonus issue. The really wise investors or the truly cunning insiders would have got in when the price was a lot lower. Rumours of bonus issues are usually spread to provide opportunity for people other than the small timers to make money.
Warren Buffett said: "The stock market is like God in that it helps those who help themselves, but unlike God, it does not forgive those who know not what they are doing." You can best "help yourselves" by learning more about the stock market as a whole and finding out more about the companies you are interested in. If you go in blindly, "not knowing what you are doing", basing your actions on rumours, you will have nobody to blame but yourselves if you lose money.
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