"I HAVE made a ton of money on this stock. Why don't you invest in it? I'm sure you would profit from it too like me." Sounds familiar? If yes, here's a word of caution. There are enough people in the market who will try to lure you by their sweet talks and rumours. You may think a particular source is reliable, however, they may prove to be completely undependable.

If you find that a particular stock has been hitting upper circuit for the past one month and it is time for you to invest, think again.

Money, stocks and you:
In the past few months, stocks have appreciated more than 120% in a month. You start hearing rumours that a particular stock will shoot up to 10 times its worth and without complete information, rush to invest a large amount.

Now, you find that the market performs well and you are quite happy with the returns. But after a few weeks your stock starts hitting the lower circuit and you don't want to sell hoping it will improve in the future. But instead, it performs badly and you have lost 80% of your invested capital.

Frustrated, you curse the stock market for being ruthless to you; for not sparing a 'small retail investor' like you. You feel the stock market is a gambling den and only the big fish can survive.

Must read: Why the stock market isn't a casino

I regularly meet people who tell me about such incidents. They end up losing a huge chunk of their money because they fall prey to market operators and manipulators.

What should you do?
Stay away from 'cheats' and 'unethical' people in the market!

Be aware and well-informed about hot 'tips' and rumours that are floating around by unscrupulous people, looking to make a quick buck.

Read: Secrets to stock investing

Photograph: Associated Press/ Tsvangirayi Mukwazhi

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e-mail: Yogesh Chabria

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