For free investing tips, just go online

For free investing tips, just go online

Every other weekend, hotel ballrooms and conference rooms are filled to the brim with people attending seminars to learn about the latest trading strategies.

Many of the trainers advertise in newspapers and on the Internet promising guaranteed returns, or at least promising to triple your monthly income.

Other property investing seminars purport to give you "lobang" or special deals on launches here and overseas.

These do not come cheap. A weekend spent learning about technical analysis, or how to study price charts, can set an investor back by as much as $1,500 or more.

I have not attended such "investment workshops", and I don't intend to.

As far as I am concerned, the only guarantee they can offer is that your wallet will feel considerably lighter after the experience.

Why bother paying through the nose when there is a wealth of free information online?

Just look at a new study by Britain's Warwick University.

Like those of us who are always on the lookout for free lunches, the university wanted to know if the all-powerful, but free Google could be a modern-day oracle for the stock market.

And from an initial study, the results seem promising.

Warwick Business School Associate Professor Tobias Preis, University College London's computational social scientist, Dr Helen Susannah Moat, and Dr Eugene Stanley from Boston University studied 98 terms related to the financial markets.

These included "revenue", "unemployment" and "credit".

They wanted to see if changes in the frequency of such terms could act as an early warning indicator of changes in the stock market.

They demonstrated that trading on the basis of the number of queries on Google using the keyword "debt" could have brought in returns of up to 326 per cent.

That's right.

By simply tracking the word debt and trading to whether it appears more or less frequently, you can boost your returns by three times.

The team said that the research supports the idea that drops in the financial market may be preceded by periods of investor concern.

This means that investors may search for more information about the market before they are prepared to sell at lower prices.

Conversely, the researchers found that falls in interest in financial topics could be used as a signal for subsequent stock market rises.

"Analysis of Google Trends data may offer a new perspective on the decision-making processes of market participants during periods of large market movements," said Dr Moat.

In other words, there is a lot of information out there, for free, that investors can use to make better decisions about stock markets.

Even if you don't have time to set up a complex model running on a computer server tracking such financial terms 24 hours a day, there are still thousands of sites that can tell you about market trends and signals.

If you want to learn about how to value companies, there are tonnes of resources about the various valuation methods, from the discounted cash flow models to the discounted dividend one, all free online.

Many brokerages offer their analyses of company results and performance for free.

And although they are not always accurate, such reports provide a benchmark for thinking behind how they value the company's shares.

Investment online forums are also an excellent way to get in touch with active investors.

Many forum posters offer their own take on companies and it is always useful to watch and read what they have to say about market trends and data.

Some forums also have specific themes, such as foreign exchange trading strategies.

Some of this may not be the best advice, or even good advice.

I once read on a local forum that trend lines on a price chart for a company showed that its stock price was about to shoot through the roof.

Three days later the company's share price actually fell by 20 per cent.

No, these forums are not, by any means, oracles. Many of them are probably false prophets.

But at least they don't cost a dime and don't promise investors things they probably can't deliver.

aaronl@sph.com.sg


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