How to Avoid the Risk of Getting Trapped in Fried Stocks
How to Avoid the Risk of Getting Trapped in Fried Stocks
Shares are considered an investment instrument for investors to gain significant profits. However, there are also risks that are worth paying attention to, especially in the form of fried stocks. Fried stocks are stocks with poor fundamentals, but which experience irrational fluctuations due to market manipulation carried out by certain parties.
Fried stocks often trap investors, one example is an Indian conglomerate named Gautam Adani who lost assets of up to US$120 billion or the equivalent of Rp. 1.800 trillion as a result of a Hindenburg Research report released on January 24 2023.
SEVP Retail Markets & IT BNI Sekuritas Teddy Wishadi revealed that these fried stocks often trap novice investors. So, it is important for each investor to conduct thorough research, understand the risks, and consider the overall investment objectives before deciding to invest.
In this regard, Teddy provides several tips to help investors avoid the trap of fried stocks:
Conduct In-Depth Fundamental Research
Before investing in shares, investors need to conduct fundamental research on the company issuing the shares. Review financial performance, business prospects, management, and other factors that influence stock value. Information can be obtained from company websites, media coverage, or research team recommendations. For example, the BNI Sekuritas Retail research team provides insights for investors every day.
"With a good understanding of company fundamentals, investors can make investment decisions that are more based on objective analysis," explained Teddy.
Avoid Stocks with Unreasonable Volatility
Stocks with abnormal volatility can be used as an indication of being fried stocks. As investors, if they find such shares, they must be more alert and carry out a complete stock analysis (fundamental and technical) before making an investment decision.
Beware of Invalid Information
Don't be tempted to follow investment recommendations that are based on sources of information that are unclear or whose validity has not been verified. Avoid being swayed by market rumors or investment offers that are too good to be true. Always check the veracity of information received through trusted and verified sources.
Investment Portfolio Diversification
One effective way to reduce the risk of stock investment is to diversify your portfolio. By owning a number of stocks from different industry sectors and varying levels of risk, investors can reduce their exposure to the specific risks associated with one stock or one particular industry sector.
"Portfolio diversification can also help protect investment value from negative impacts that may arise due to market fluctuations," said Teddy
Use a Trusted Investment Application
Use investment applications that have been supervised by the OJK and are trusted, such as the multi-investment platform BIONS (BNI Sekuritas Innovative Online Trading Systems) to carry out stock transactions. Using the latest technology, BIONS presents one of the superior features, namely Automatic Order. Through the Automatic Order feature, customers can order shares automatically based on the desired criteria/conditions.
With Automatic Order, customers can choose the desired investment condition to place an order or provide warnings such as Booking by Price (triggers an order based on the specified share price), Booking by % GainLoss (triggers an order based on a predetermined % unrealized gain/loss), Booking by Time (triggering an order based on predetermined time parameters), Booking by Trailing Stop (executing a sell order when the stock price which is moving uptrend has started to show a signal that it will undergo a correction), and Booking by Bottom Rebound (executing a buy order when the stock price which is moving downtrend has started to show signals that it will experience a rebound).
"By using a trusted investment application, investors can reduce the risk of being trapped in uncontrolled stock transactions," said Teddy.
Have and Stick to an Investment Plan
A good investor is an investor who has a plan or strategy for investing. Investors are also expected to remain compliant with the investment plans that have been set. Avoid being tempted to make transactions based on emotion or impulsiveness without considering rationally. By being disciplined in following an investment strategy, investors can reduce the risk of being caught in the trap of fried stocks driven by market instability.
"Manipulating share prices can be categorized as one of the capital market crimes and is contrary to Law (UU) No. 8 of 1995 concerning Capital Markets, especially articles 91 and 92. Investors are advised to increase their astuteness in recognizing fried shares and managing investment risks more effectively. "Even though stock investment can present opportunities for large profits, caution and rational considerations are still needed in making investment decisions," concluded Teddy.
