6 Myths Surrounding Stock Market Investing

Published on: Saturday 17 September 2016
6 Myths Surrounding Stock Market Investing

Everything in today's world comes with its set of myths and stock market investing is not an exception to it. Ironically, the myths associated with this business are not positive but negative. Because of this, many have decided to keep distance and have hence lost a good opportunity to make profits off their money. Some myths that surrounded it are enumerated below:

1) No difference between Gambling and Stock Market: Probably one of the funniest, if not the most blatant of myths. Gambling is based purely on luck. However, stock market trading is based on calculations and future projections. There are mechanisms that can predict the future course of a set of shares with 70 - 80 percent accuracy. If not because of the risks, many are bay because of the taboos involved with gambling.

2) Not for Average Income Groups: Again, a myth that can easily be negated. The prices shares may be as low as $1 (penny stocks are even lower). Buying stocks is affordable for everyone. The key lies in holding the stocks for a long period of time. There are numerous cases where the average income people have become rich and successful. In the long run, stocks have the ability to beat inflation.

3) Invest in Stocks of High Value: Unlike popular belief, low priced stocks have a better chance of making profits compared to those which are highly priced in the market (in the short run). Stocks of large multinationals experience only marginal fluctuations and repay only in the long run. Further, if a stock experiences a sudden dip or rise, do expect it to come back to normal soon.

4) Risks Involved is Very High: The usage of the term "Very High" makes it a myth. Yes, there are risks involved. But it is strictly limited to the short term. In the long run, everything averages out and returns profit. As far as market crashes go, they are the times when the stocks are at their lowest, thus making it the best time to go on a buying spree. At this point, also keep in mind that taking loans for stock market investment should be avoided.

5) Stockbrokers Know Everything: Amusing to say the least. While this is a stockbroker's playground and they are expected to know everything about it, they are also humans and are viable to make mistakes. Add to this the fact that stockbrokers work at the trading level and not at investing level. Hence, it is making them even more unreliable. The best and the only way are to do some market research and invest money based on the analysis made.

6) Suggestions by Market Analysts are Correct: Think about it, if all their predictions were correct, they would have been multi-millionaires and not have been working as analysts. Do not blindly follow what they have to say. They are good only as long as their suggestions are heard and kept in mind while making an informed decision.

In the end, just try to get the fundamentals correct and everything will automatically work out for the best.