Rumours are
good at achieving one thing: chaos and imbalance among people. People often
irrationally believe anything that they can agree with, or agree with anything
a person they trust says. However, in the stock market, and in any other
related industry, rumours could cost millions of pounds in losses.
1.
Facts
Are Very Important
Objective
value is very important in investing. Looking at things objectively, and not
just believing hearsay from people that an investor trusts is the best way to make
financial decisions. Nothing is final until it has happened, yet analysing the
details on your own about the company is also very important.
2.
Feasibility
and Accountability
After hearing
a rumour, analyse the feasibility of the financial risk involved, and the
decision-maker in the company’s consequences upon making the choice. If there
is a rumoured merger between two gigantic companies, assess first whether company
A will want to compromise the good quality of products it has with company B,
who mass-produces the same goods. Branding, reputation and other factors will
help you dispel or agree with the rumour with enough evidence.
3.
Do
Not Believe the News
Financial
news and other media often hype company bankruptcies, which have investors
breaking their own banks to save their skin. However, a bankruptcy only means
the assets will be liquidated and your shares’ final values will be returned to
you. Do not let the hype of bankruptcies or bad investments from companies fool
you easily. If a product line from a reputable technology company you invested
in fails this year, it does not mean they lose their overall inherent value;
they just tarnished their consumer confidence quite a bit.
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