New Delhi, Nov. 19 -- Charlie Munger famously said, 'Show me the incentives and I'll show you the outcome'. After my last column , 'The Great IPO Rush: Never go by the big names that have invested', where I explained why big institutional names invest in some crazily-priced initial public offerings (IPOs), people asked me about other incentive-driven behaviour by financial market participants.

Let us start with stocks being recommended as 'buy'-rated by large stock broking and research firms and how much credence you should give such recommendations. The big names may lack either the competence or the integrity (or both) to give the right advice.

Surprised? They may not be capable of doing a good job of analysis or may not put enough ef...