Losing your hard-earned money in the stock market? What’s new in that, not everyone is made for the stock market and trading? Is that what you tell yourself?
Fear of missing out is the biggest reason you lose money in the stock market. When you see your friends and relatives investing and making huge profits, you are tempted.
Everyone is talking about success but you have to stand there and listen because you are the only one not investing. Then you decide to invest all your hard-earned money without knowing anything about the stock you are investing in. You just learned about it from a friend or TV news.
But what happens is that your stock starts going sideways and you put extra money by borrowing from a friend or taking a loan to average out your investment in the hope of earning more.
Your investment gurus are still saying that your stock will be the next big thing and in the hope of earning multiples, you raise money by putting your home as collateral and taking a huge pile of cash from a bank and putting it into your stock. Over the next few trading sessions, your stock is moving negatively and then it gives a rally, you think your time has come but again the next day it starts moving downwards and it is crushing your every dream with it. In a few days, it has touched its 52-week low and now it is not moving the way it was a few days ago. You are left with nothing and you have lost almost all your money. The bank’s notice is filling your mail but you cannot do anything about it.
At last, when thinking about what went wrong, you realise that you never studied about the stock you traded in and you blindly believed your friend and then some self-proclaimed investment gurus. Fear of missing out played its cards at the right time and you invested your hard-earned money in a penny stock.
Never enter into the stock market under peer pressure and persuasion by family members unless you have done your research and you are interested in the ownership of such stock because the share market is not merely a place to trade shares. You’re not only dealing in shares, you’re dealing in that company’s ownership.
Making money in the stock market is not an easy thing as claimed by so many investors. After a stock loses its value, they say they are long on the share but you should have applied your own analysis.
You need to understand stock market concepts, how it works, and when to enter and exit from the share you were trading in. Understand its books and management, what are their long-term aspirations, and how they are changing their way of doing business with the change in macro factors of such an industry. Most important, analyse the cost of shares and then decide if it is time to buy that share or you can get a cheaper price in near future.
Good things come to those who wait. A patient seeker will be satisfied in due time; patience is a virtue.
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