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Lack of proper knowledge is one of the primary reasons for widespread misconception about the stock market. Think about you, completing our formal education requires around 12 years. From nursery to higher level, the journey is quite challenging. In post higher education level, we choose our career path. To complete graduation and post-graduation, it requires another 4 to 8 years. After the rigorous 18 to 20 years of hard work and dedication, we finally secure a job. Whether you are self- employed or a salaried professional, you must go through the 18 to 20 years of learning. Every single penny of your earning is the result of those 18 to 20 years of hard work. But the surprising fact is that is the stock market, investors attempt to earn from day one. Doctors dedicate four years of Premed courses and four years of MD courses an then three more years for training in practicing. Finally, they are capable of making money from the profession. However, in the stock market, many investors attempt earning money from the first day. If you are not well equipped with knowledge and expertise and still going for a critical medical operation then what will be consequences? Who is to blame of such consequences? Unfortunately, in the stock market, investor jump with little or no knowledge, end up with a loss and then blame the market, advisor, business media and etc. Excluding themselves, investors are readily to blame anyone.
A stock is nothing but partial ownership in the business. Consider yourself an owner of multiple local restaurants. As an owner, would you consider buying and selling your restaurants frequently? If your business faces a temporary downturn, would you consider selling a restaurant and then buying it back again when it is a better time for business? Surprisingly, in the stock market, many investors are ready to do the same. A mere 10% rise in stock price tempts to book profit, while a 10% drop in the stock price creates panic. The more you trade, the chances of losing money will widen, if you can consider yourself as a partial owner of the business, then you can restrict yourself from frequent trading.
Before purchasing cars, expensive cell phones or televisions, we conduct rigorous research, I still remember before purchasing m first car I had spent a minimum of 30 to 40 hours on the internet over a three months span, visited the showroom thrice and then monitored car price trends continuously for a while. After that, I took a test drive with another friend, consulted my family members and then purchased the car. While purchasing a stock, do you conduct such rigorous research? Consider the last time you made an expensive purchase, be it a car or a mobile phone or laptop or any other products. You try to collect information from reliable sources, internet and etc. and then decide accordingly. But, do you spend a fraction of that time do the research before making an equity investment? Before jumping into the stock market, you need to sharpen your knowledge.
