Updated: Feb 5
Money Making Hacks by Jasmeet S Anand Vol - 4
Less then 5% people in India trade on stock Market and its one of the fastest growing stock markets across globe. Imagine this 5% number getting multifold, where would it take the stock market?
In USA, this percentage is 50 and in Canada its 39. Though with the population we have in India, even 5% equals 39% of Canada in absolute numbers.
We have grown in an environment which carries some myths about stock market. These myths do not let many start their journey of investing.
Here are myths we grew with and exist in our society:
1. Stock Market is equated with Gambling
Every person has a desire of owning a business or becoming an entrepreneur. Stock Market offers you avenue to fulfil that dream. Yes, In case, you jump into a business without knowing tricks of the trade, What will happen to you, will happen to you here as well.
You are entering in a partnership by buying even one share of a company, Be careful in choosing your partner. Do your due diligence before getting into a partnership.
Any business is gamble if you do not know the business, Know the business you are getting in and there is no gamble.
Looks like “Sour grapes story”, cooked up by someone who did not understand it.
Myth : Stock Market is Gambling Bazaar.
Reality : Stock Market is a Market Place.
2. You will always lose
To keep new comers away from the market, there are people who will always tell you, that no one has ever earned from stock market. If that’s true, How come thousands of stock brokers and brokerage companies are making money. Every day a New app comes up to help you invest in stock market.
Yes, One has to be very careful with the money getting invested. If you invest, probability of loss is lesser vis-a-vis trading. Know the difference between two and you can increase probability of making money.
Fear is genuine and there are stories of people losing a lot of money. Learn from the stories and step up!
Myth : You always lose in Stock Market.
Reality : You play safe, You make money.
3. Involves a lot of Research
What is really needed is common sense and little bit of reading on the financials and acceptability of the company in society.
There is no deep research needed before investing. Lot of online modules are available A simple class on investing in sectors or ETF for beginners can help you understand the trade.
Also, without any research or understanding, No business is going to give you returns. You need common sense to invest in Stock Market.
Myth : Trading or investing involves lot of research.
Reality : All it needs is common sense
4. Middle Age people Invest in Stock Market
Its a misconception that only middle age people invest in stock market. Recently the data shows that more and more youngsters are getting into stock market.
Gone are the days when buying a house & investing in stocks was only associated with middle age. As means were lesser in earlier days and not so many youngsters had access to money and knowledge of the stock market. In India even today only 4.6% people invest in stocks.
This has nothing to do with the age of investor and more to do with the awareness levels.
Myth : Only Middle people Invest in Stock Market
Reality : Awareness levels are low, Now a days 18 year old have started investing
5. Rich People can only Invest in Stock Market
Looks like, To keep poor always poor, this theory was developed. One can enter with Rs.100 in stock Market. You are not going to buy the entire corporation, You are going to invest in the company.
The idea of stocks or shares is that a common man with desire to own a business, is able to buy fraction of any business.
You need not to be a millionaire to enter in stock market. All you need is little business acumen and some money. (Some money is not defined any where)
Myth : Stock Market is Rich peoples game
Reality : You can enter in Stock Market with Rs.100 too
6. Stock Market can make Overnight Rich
Only a Lottery ticket or a distant relatives “Last Will” can make some one over night rich. For every one else, there is a route to be followed to be rich. Same applies in Stock Market as well.
Stock Market is also a business like any other business, You may make all right moves to move faster than others, You may make some wrong moves and you slow down.
There is no rule which says Stock Market will make you Overnight Rich, Yes, It promises you to make you meet some who have become rich but not Overnight.
Myth : Stock Market can make you overnight Rich.
Reality : There is no such rule which can make you Overnight Rich
7. Only Clever People Can make Money
We can have discussion for hours on “SMART” or “CLEVER” definition and won’t reach on any conclusion.
For Stock Market, An ordinary brain with discipline can make money. Things needed in stock market are discipline and resistance. If one can give up on greed and be disciplined, in investing, One surely can make lot of money.
Myth : One needs to be Clever to make money from Stock Market.
Reality : One needs to be Disciplined to make money from Stock Market.
8. Involves a lot of time
Some unaware people think that stock investing involves 9 am to 3.30 pm active monitoring of stocks. Thats surely not true!
One, it does not need your eyes on computer all the time, Even if you are a day trader, there are options of stop loss or higher limit selling.
An investor does not think of the stock movement every single minute. Investor has a plan date, in mind before which the stock should move in the direction.
Myth : Stock Market needs your eyes on terminal every single Minute.
Reality : Just arrive on a selling or buying price, Place a bid and relax.
9. Diversification always helps
Very often we hear diversify your portfolio, and many amateur investors start investing in multiple shares listening to the advice.
Diversify your portfolio when you are in doubt or don’t trust your decision on buying a particular company or sector. When in doubt, Diversify.
Or, When your portfolio becomes big enough that you would like to wander around for more sectors or shares, Do Diversify. Till then accumulate the stocks your are confident of.
Even Warren Buffet says, You should only need to invest in 2-3 scripts and stick to it.
Myth : Diversification in stocks always helps.
Reality : Diversification helps when there is risk in your existing portfolio.
10. What Goes up must come down or Vice Versa
This is being quoted again and again by many. This may be true to Sir “Isaac Newtons” theory on apple. But, surely he did not write it in the context of Stock Market.
If the company is doing well and the market is supported with liquidity, the chances of the stock prices coming down are not likely, vice versa is the company is not doing well and the investors are shying away from a particular company, why would the stock price go up after a downfall.
Its a good quote for keeping the morale of investors high but surely not a rule!
Myth : What goes Up must Come Down in terms of Stock Prices.
Reality : The Stock Prices are being driven by various factors and not by above quote.
Let’s break the myths and unleash the potential. For years, many of us have stayed away from Stock Market cause of the Myths associated with it. I have tried to break some through this write up . But, Am sure a long way to go yet.
States like Gujarat and Maharashtra which have high number of young investors investing in Stock Market, Look at their growth. Both the states have more than 1 crore registered investors on Stock Market.