Like most other institutions, the stock market also has its share of myths. These myths have kept many people away from the markets. Thus they have lost the opportunity of making a fortune in the stocks. Here we attempt to dispel some of the myths surrounding stock market investing:
? Stock market investing is similar to gambling. This myth is probably the worst one. It has been responsible for keeping many investors away from the market. There is a major difference between the two. While gambling is a game of luck, the market investing has a pure scientific basis. There are various scientific methods available to determine whether the stock is worth investing or no. But there is no such thing when it comes to gambling.
? Stock investing is meant only for the rich. In fact, the opposite is true. Many investors like Warren Buffet have become rich on the basis of their investment in stocks. Over a long term (5+ years), stocks have managed to beat inflation and make investors very rich. Start small. Make small regular investments in the stock markets. Select good companies with strong fundamentals and hold them for a long term. Then watch your investments grow.
? Low-priced stocks mean good investment. This is strictly not true as low price of a stock could be because the company does not have a strong fundamental basis. The market factors the fundamentals over the long-term. So even though you may see such stocks shooting up very quickly in the short-term, over the long-term their prices will crash. So instead of worrying about the prices, consider the business of the company. Use the fundamental analysis methods to determine whether to buy the stock or no. Remember investing in stocks means you are buying into the business.
? Stocks are risky. This myth is akin to the myth 1. While stocks tend to be volatile in the short-term, over the long-term they tend to even out. So if you are in the market for the long haul, don?t worry. Look at every market crash as the buying opportunity. Also avoid buying stocks on borrowed money. Don?t take loans for investment and instead invest only the amount that you can afford to invest. (Find out about Share Trading Reviews. Also make sure to visit xforex.)
? Broker?s tips are a sure shot way to make money in the markets. No, this is not true. Most brokers tend to give tips meant for traders and not investors. Now traders follow a different strategy from investors. So these tips don?t work well for the investors. Instead do your own research and then select the stocks to invest.
? The market analysts are always right. It has become a common trend today to sit and watch market analysts make their predictions about the market movements. These analysts tend to recommend which stocks to buy and which ones to sell. Many people tend to take these predictions quite literally. Well, if that was the way to become rich in the long-term, then we all would be rich, right? Even God can?t predict the market future. So take these analysts with a pinch of salt.
So remember these myths when you are planning to invest in stocks. Instead buy fundamentally-strong stocks with a long term view to amass wealth.
March 17, 2012
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Tags:?Common Myths Of Stock Market Investing ?Posted?in:?stock market investment
Source: http://whatisa-investment.com/common-myths-stock-market-investing/
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