I have seen that many people are afraid of investing in stocks or commodity markets just because they do not have knowledge about it, some even consider it gambling and do not want to enter and some consider it to be the game of rich and they are the only ones who drive these markets. So I have decided to clear some myths about Stocks and Commodity Markets here.
Some of the Stock Market myths are:
Stock Markets are driven by rich people and brokers and they are the only ones who earn
This is totally a myth that big institutional investors or brokers can move the markets the way they want and earn because earlier it used to happen that only brokers were the ones who used to have every data with them, but with the advent of internet even an ordinary man can have information about companies with them and hence they can speculate markets up to some extent. Since trading takes place online in most of the stock exchanges you have transaction details of trading at the end of the day in your inbox or your cell phone or PDA, which is very helpful for intra-day traders. The individual long-term investors have advantage over institutional investors as later are under extreme pressure to get high returns every quarter while the individual investors have the ability to look beyond the temporary downturns in favor of long-term outlook.
Investing in Stocks is just like gambling
Many people consider trading in share market to be gambling because the prices of stocks go up and down and people bid on them and earn profit or bear the loss without trading anything which is tangible. But the thing which they forget to consider is that a share represents the ownership of a company, it entitles the holder to a claim on assets as well as a fraction of the profits that a company generates.
Gambling is a zero-sum game it takes money from the loser and gives it to the winner no value is ever created. By investing we increase the overall wealth of the economy. As companies compete, they increase productivity and develop products that make our lives better. So, there is difference between investing and creating wealth in zero-sum game.
Having a little knowledge of Stock Markets can do the task
There is an old saying in India that either you should have full knowledge or its better not to have knowledge at all because half knowledge leads to disaster only. If you are having some knowledge about stocks and share and planning to enter, then I would like to suggest you to take either full knowledge about the markets or hire some advisor. One thing to notice here is that the cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.
Conclusion
In the end I would like to tell that following the crowd does not help in Stock markets saying what they are saying, doing what they are doing will not help you much. Successful investing requires a lot of hard work and analysis.
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