Whenever we are about to start something new, we may be cowed down by a lot of myths and negativities. Because we are mostly deceived by negativity than positivity. while turning on the tv, we are watching more negative and sad happenings than good news. Because negativity is the hot news. Likewise, views on Stock Market are sometimes cast negatively. There are lots of myths on Stock market were roaming around. Let’s Bust them!
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8 MYTHS ON STOCK MARKET
If you’re still holding back with myths of stock market, this article will make you clear. Let’s discuss the common myths of stock market.
1. STOCK MARKET IS GAMBLING
We might come across some people who say something about anything without proper analysis or proof. We utterly believe them because they might be our closest friends or relatives. The stock market is not a casino or gambling. It’s not something we put in some money and take double out of it. Knowledge of the stock market is necessary before entering the stock market. As a result, Trading/Investing with proper knowledge can give good returns. There are many things to learn such as fundamental analysis of stocks, technical analysis, market sentiment, etc. Click here to learn the basics of the stock market.
You know what happens to a gambler ultimately. The gambler may end up losing all his wealth accumulated at the end of the day. Similarly, if stock market is considered as Gambling, the trader/investor will end up like a gambler.
2. STOCK MARKET IS ONLY FOR EXPERTS
An Expert was once a beginner!
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This myth is very common nowadays, stating that the stock market is only for experts such as Chartered Accountants, financial experts, etc. In this modern internet era, anyone can learn anything with a lot of sources and forums available on the internet. In addition to this, the Stock market is not exempted from this rule. We don’t need much financial knowledge for all asset classes. One can invest in stocks, Mutual funds, Bonds, and commodities with little financial knowledge. Whereas Trading requires a good understanding of market movement, Technical analysis, and a lot more.
How do people become an expert? Continuous learning and experience. Every skill follows the same rule. Also, today many sites allows trade without real money. People describe this method as paper trading. Do paper trading, understand how things work, and implement it on paper trade.
3.WHAT GOES UP SHOULD COME DOWN
Remember the law of gravity studied during elementary school. That applies only to gravity, not Stock Market. Assuming if a stock price goes up it should come back to the same position is a bad idea. Stock price falls only when the shareholders sell the stocks. Selling of stock usually happens due to profit booking or the decrease in demand for the same. So, never believe this myth blindly.
4.WHAT COMES DOWN SHOULD GO UP
Well, Anti-Gravity is just the opposite of Gravity. And, this is not Nolan’s Interstellar where the astronauts fly against gravity. You’re not an astronaut, you are a trader/investor. It’s better to go against physics in the stock market. Only if there is a demand the stock price will rise. When the demand rises? Only when the company performs well, people tend to invest more in that company. As a result, the stock price increases. This is the actual physics in the Stock Market.
5.STOCK MARKET IS ONLY FOR RICH PEOPLE
The stock market gives you fantastic returns when handled properly. There is a misinterpretation which is investing in the stock market needs more money and it’s only for rich people. But it’s not the reality. You can even invest as low as ₹20 in penny stocks. But, It doesn’t mean always you should invest in penny stocks because of their low price. As already said, research the stock in which you are going to invest. This example is just to understand investment is not only for rich people.
6.BANDWAGON EFFECT
The Bandwagon effect can be described as the tendency of following others’ attitude/actions simply because they are doing it. Many individuals have this effect while investing in the stock market. Since the great Mr.Millionaire holds these stocks in his portfolio, I’ll also buy the same. Similarly, My friend owns this stock and I’ll buy the same. Following others and doing the same may end up losing capital. Every Individual portfolio is based on their risk profile. Therefore, the investor should analyze his/her profile on his own without consulting with others. Based on the risk profile, One can start investing in the stocks.
7.PICKING LOWER PRICED STOCKS
This is even followed by an experienced investor and I have seen some of them personally. They think that buying a lower stock price (for ex: picking stocks that are below ₹100 only) will move to a greater price in the future. Additionally, They think that those stocks can’t fall below ₹10. This doesn’t make sense. It doesn’t mean that it has more space to grow because of its lower price. Moreover, the price of the stock is determined by the supply and demand for that company. Valuate the stocks based on their fundamental and other important aspects and then invest at the correctly valued price.
8.DON’T TRADE ONLY INVEST
There is a fact that only a few traders have been successful. Almost 95% of traders lose money and become unsuccessful. As already discussed, negative things deceive people than positive things. we don’t think about the 5% successful people. Loss may occur due to various reasons and that doesn’t mean that we will also incur the same loss. Proper knowledge and experience is the key. SimplyRead suggests If you don’t have time to watch the market closely you can only invest. On the contrary, if you have time and mindset to watch market all day, you can trade.
TO WRAP THINGS UP
Myths are Myths unless its proven!
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Before proceeding with anything, one should do proper research and analysis. Don’t follow myths. Do the research and give it a try.
Hope SimplyRead busted all the myths from your mind and flushed it. Also, I would like to know what myth you had in your mind. Do comment your thoughts in the comment box.
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