At times when highly respected stock investors put their own personal fortunes on the line, retail investors can follow their lead to substantial profits in some cases.
Stock traders who have followed Warren Buffett after he makes a substantial buy in a distressed company have come out on top on several occasions. For example, Mr. Buffet purchased shares of Goldman Sachs in late 2008, while the market was sinking and long before it hit it’s eventual bottom in March of the next calendar year.
Other instances have proven not to be so fruitful or profitable where retail investors follow big named investors. One such case would be those folks who followed Sears Holding Co.’s chief executive officer Eddie Lampert and bought common stock of his company over the last few years. The stock symbol is SHLD. Just take a look at the stock’s performance thus far in two thousand and twelve and you will see what I mean.
Sometimes the stocks that are purchased may even be penny stocks. Some new traders follow services like the penny stock prophet and choose to put their money into his stock picks. The risk is higher when it comes to penny stocks, however. There can be unresolved company issues that investors are not aware of that can suddenly be revealed. These revelations often will send stock prices tumbling the next trading day or session.
When things like this happen, traders can get mad and begin to say the penny stock prophet scam is something to be avoided. However, if they simply took the time to realize that there is a high risk associated with penny stocks, perhaps their emotions would be kept in check. So to recap my thoughts and what I want to convey to you, always consider following a big stock investor when he makes a bold buy on a stock that is out of favor in the public eye. Also realize that the trade may take months to turn in your favor, however, and also know that some of these trades will turn out to be losers. Consider these things and you may succeed and enlarge your trading portfolio and assets.