Friendly advice...What if it was someone else’s money?

Wednesday, 8th July 2009 12:24 - by Boredmum

I have a friend that posts on lse.co.uk and ADVFN. I only found out through having a conversation at playgroup one day. I was excited at starting my Blog and had mentioned this to him. He then went on to tell me that he also posts and dabbles in the markets. Well, we had an interesting conversation that day about our investments, good and bad. He recalled that one I was heavily invested in was Tower Resources (TIDM code: TRP). One day, he posted on the TRP thread, having followed the chat for a while as he was thinking of investing. My advice to him was “Wait until the drill results. You will still have a chance of making money if the results are good. If it is a duster, then you will have missed the risk”. So, recently this same friend posted on the coal producer Caledon Resources (TIDM code: CDN), wondering if it was good for a trade. The price was a nice low 48p, with a trading range appearing and a good chance of it running up to 56p. My advice noted the possible trading range, but I also advised caution as they are in possible buy-out talks at the moment. If that is successful, we could see 80p minimum, but if the talks failed then the market would really make a meal of the share price and a huge fall would be seen, regardless of any value the company had. We all know how these things are overdone. This all made me think, as a friend I would not want him to lose any money and was advising caution, so why was I investing so heavily here? It didn’t make any sense. In future, when I go to invest I should stop and think. If a friend were to ask my advice about investing here, what would I say? I’m sure I’ll still have my high-risk trades, but no point going in heavy on high-risk. I shall try and keep them for little punts here-and-there instead.