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Revelation of the Danger in Following Stock Recommendations

Jaycee De Guzman
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Jaycee De Guzman

Jaycee De Guzman is an online business strategist, an equity analyst, and an entrepreneur. He is a computer scientist by profession, specializing in the field of computer and internet security and systems development. His business ventures are in the fields of information technology, internet marketing, finance, real estate, and agriculture. Visit his website at www.jayceedeguzman.com.
Jaycee De Guzman
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The Stock Signals Philippines is in a complete overhaul. My team and I have decided to challenge the status quo in terms of how stock trading and investing support services are delivered. My self-realization that inspired these changes in our services may disrupt your peace, especially if you rely heavily on stock recommendations. Reader’s discretion is advised.

Question: “Based on the current set-up of your website, how do we determine which stocks are good for long-term and short-term investing? Are you still going to provide a list of recommended stocks based on their fundamental or technical performance? Is it the subscribers of Stock Signals Philippines who will choose the stocks they prefer to follow and your analyst will provide his insights? If the latter will be the setup, then, why do we need to renew our subscription?”

You cannot (and no one can) make a standard or a universal classification of which stocks are good for long-term and short-term investing. Peter might consider Stock XYZ as a stock that is good for long-term investing, but John may not touch it even with a 10-foot pole and vice versa.

Here’s a glimpse of what will happen in the new platform of the Stock Signals Philippines. There will be an assigned analyst for every sector or industry. We will rank the stocks based on data-driven parameters (technical and fundamental). Ninety percent of the final score will come from data-driven parameters (technical indicators and fundamental criteria).  You can filter ALL stocks according to one or more parameters.

The analyst can only influence the ranking by 10%. There will be an “Analyst’s Rating” column where our analysts can rate the stock. My goal here is to minimize the bias of the analyst. That is why the impact of the analysts’ rating’s weight is limited to 10%.

You don’t have to ask first before we give you something. We will proactively provide our analysis for ALL stocks. You can make a personal decision either based on the overall ranking or on individual parameters or a combination thereof. All subscribers are free to ask follow-up questions addressed to the assigned analyst on that stock.

You will never be on your own. We will provide the tools, training, and support. Our ultimate goal for the Stock Signals Philippines is to make it operated by an Artificial Intelligence (AI). In our Research and Development department, we’re studying how an AI can help us develop a bias-proof system for traders and investors.

artificial intelligence

There are more features in the Stock Signals Philippines than what I’ve said above. I’ll announce them all in detail on before the soft launch of our re-bumped services. I’d like to keep the element of surprise for now.

Now, please allow me to share my realizations about this “stock recommendation” thing.

I understand that seeing a pre-defined list of “recommended stocks” has become the norm among trading and investing support providers and brokers. This practice has conditioned the minds of many traders and investors to rely heavily (and most of the time, blindly) on ready-made stock recommendations.

Whether you admit it or not, many people buy whichever stock is on the list “just because” they trust the person who recommended those stocks. Trusting the reputation, knowledge, and skills of the person who recommended those stocks is not a bad thing, but asking yourself if those stocks are perfectly aligned to your investment goals, personal risk tolerance, and investment horizon is another thing.  Do not confuse due diligence with trust.Jaycee De Guzman

For more than 2 years, I was giving a ready-made list of stock recommendations to thousands of investors. No matter how many times I give a friendly reminder to check the forum first for the data-driven justification on what made me think that a stock is worthy to be traded or invested into, many still go directly to the list first and to the forum last.

That sequence is dangerous because there’s a high probability that the person might have already bought the stocks before he or she got the chance to see what I saw on those stocks. What mechanism do we have to trace the behavior flow of our clients? We have web analytics. I see the behavior flow of people on our website. I know your frequently-visited page on our website, the frequency of your visits, etc. Do not worry because we use a Security Socket Layer Certificate that protects your personally-identifiable information (PII). Now, let me speak English again. I don’t want to bore you with a technical stuff.

This undisciplined behavior is very similar to the stories of many people who followed someone else’s high-conviction but an unverifiable recommendation. They woke up one day wondering if they did the right thing. Too late! The stocks are in their portfolio already.

The “buy now, think later” is not a STRATEGY but a SUICIDE.Jaycee De Guzman

suicide

I can’t blame the “buy now, think later” psychology of many people because that’s how “stock recommendation providers” have conditioned the minds of many people. I was once guilty of that, and I am wise enough not to repeat the same mistake.

Surely, one can say, “Oh, well, I have a disclaimer at the bottom of my stock recommendations. I tell them that they must still execute due diligence, check the chart, and read my analysis.”

A caveat won’t work. I’ve been doing business online for more than 15 years. Most people just click the “I have read the Terms and Conditions” checkbox even if they didn’t read it.

What’s my point? It won’t matter even if you’ll use font size 72 and capitalize the word “CAVEAT” on your disclaimer’s area. Many would still buy first and repent later.

caveat

Disclaimers and friendly reminders don’t work anymore. Is there something that one can do? There is! You got to structure your service in a way that you can impose discipline to your customers. Have a process in place that your customers must go through it if they are dead serious in wanting to come out better than they were before. This is the reason why we have decided to rank all stocks and assign a dedicated equity analyst per sector.

In this set-up, we can help our clients learn how to use their own judgment, with the help of our tools and expertise, in making an intelligent disposition and decision for their stock investments.

Why is it so much of a big deal for me to direct you to our data-driven analyses first? The old adage says, “Beauty is in the eyes of the beholder.” An analyst could be bullish in one stock because he saw something that perfectly matched HIS investment goals, investment horizon, and risk tolerance. That stock was beautiful to HIS eyes. The key word is “HIS” and not “YOURS”.Jaycee De Guzman

What’s my point? One can be bullish on something you’re bearish about. Everyone has his or her own investment goal, investment horizon, and risk tolerance.

When you allow and discipline yourself to read our data-driven analysis first, you give yourself the chance to scale things and ask yourself if you agree with our analysis or not.  You’re allowing yourself to be the director of your money not because a certain Pontius Pilate was bullish on a particular stock but because of YOUR own judgment based on YOUR investment goals, YOUR investment horizon, and YOUR risk tolerance.

you

The psychology of investors is the hardest thing to tame. I can analyze stocks on my own, but I had to consult my psychologist friends to learn the ways on how to effectively tame the impatient, insistent, and undisciplined financial psychology of a person.

So many support providers give stock recommendations because they know that many people HAVE NOT REALIZED YET that those stock recommendations are not tailored-fit to their own investment goals, investment horizon, and risk tolerance. People who rely on stock recommendations usually think that a ready-made list of stock recommendations is the shortcut to investing and the solution to their busy schedule. Sooner or later, these people will find themselves spending more time re-strategizing and repairing their portfolio than if they realized early on that the stocks they bought from the ready-made list of stock recommendations were not tailored-fit to their investment goals, investment horizon, and risk tolerance.

recommendation

In the Stock Signals Philippines, we’d like to save you from the “buy now, think later” or “buy first, read the analysis later” suicidal plan. We’d like to save you from people who not-so-obviously but intentionally influence your decisions based on which stocks they’d like to hype.

Choose and stick with the Stock Signals Philippines if you’d like to learn how to give data-driven justifications in all your decisions. You will stick with us not only because we provide understandable fundamental and technical analyses, but also because we help you discipline yourself not with the useless “caveat” word but with a systematic process.

There will be no more stock recommendations in the Stock Signals Philippines because we can do and deliver something better than that.

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