A few days back, an investor received an SMS advising him to invest in a particular scrip at Rs 10.50, with a promise that the scrip would go up to Rs 12 in two days and Rs 20 in two week’s time. The SMS advised the prospective investor to buy 5,000 shares!
The name indicating the source of this SMS appeared to be similar to the name of a popular brokerage house, but on careful reading, the investor noticed a slight difference between the two names. The striking similarity in the names meant that the sender wanted the investor to believe that the recommendation was from the popular brokerage house, which it was not.
Such SMSes are being sent to lakhs of investors everyday promising them multibagger returns almost overnight. Some gullible and ill-informed investors may fall prey to these enticements, while informed and intelligent investors choose to ignore them.
Such tips are usually well-laid out traps by operators and speculators in the market who take a long position in a particular scrip and then entice amateur and gullible investors with promise of huge returns within a very short span of time. When retail investors fall for the trap and start buying the scrip, these operators and speculators then offload their positions and make a fortune for themselves, while the investors are left in the lurch with a dud stock.
So, if you are among those investors who invest in stock market based on such tips, it is better that you stop investing on tips before you burn a hole in your pocket and even lose your shirt!