What can every investor do if he really wants to think big? He can definitely learn from a seasoned investor who has been there and done it before. Every investor would love to do this. And, definitely wants to. So, what is stopping every investor from learning from a successful investor?
What really stops an investor is his need for an instructive investment recommendation. He wants seasoned investors to tell him exactly what he must do. And, he wants it to be as close as possible to what that seasoned investor is actually doing in his own portfolio.
Now, this expectation is plain unrealistic. Nobody has an incentive to do that, and the downside risk in making such explicit suggestions is way too high. So such recommendations are actually never going to come one’s way.
But investors simply will not accept this hard truth or settle for anything less. So, they look for any cues on what the seasoned investors are doing. Cues like block deals, pre IPO placements, bulk purchases reported to the stock exchanges, and private placements in listed companies act as serious pointers in forming public opinion.
But, here is the risk and the downside. Sometimes, large investors buy such blocks with the clear intent of doing a quick market trade. After all, they are fully aware that their name sells. And they can sell their quantity very cleverly without reporting sales or disclosing their intent to sell. So, transactions that want to attract positive public attention get reported, while those that don’t need to be seen get cleverly hidden from the public eye.
This is the risk from blindly following successful investors. You can mistake their short-term trades for long-term investments. And you could well become the patsy if you dont really read their intentions closely.
That is why individuality counts more, protects better, and makes you grow as an investor. If you still want to learn from a seasoned investor, learn to appreciate his thought process instead of trying to blindly clone his ideas.