3 Popular Stock Market Myths You May Have Heard
There are a number of myths that plague the stock market day in, day out. As an investor, you must be wary of them to succeed in your investment journey.
The stock market is just like any market – you buy things from it and you also sell in it. Much like every market, it has its peculiarities. You have probably heard so much about the stock market; some are true, and others are just absurd.
However, it is an understanding of what defines the stock market and what should count as a fallacy, that allows you make the most of it or completely steer clear from it. Here are some of the common stock market myths:
It Is Another Gambling Platform
The stock market is many things but it is not a place to try your luck. It is a platform where you can contribute to the growth of a company or the economy at large. Having a stock means you become an owner of the company you invested in.
Gambling on the other hand means taking money from some people and giving it to others. There is no value addition and it is a zero sum game. The nature of the stock market requires an investor to have a degree of understanding of the financial world, to have carried a level of technical and fundamental analysis, as well as the ability to employ useful strategies.
Even when price movements seem to be haphazard, there are many factors at play that can be analyzed at the very least. While the stock market cannot be entirely predicted as a result of the many market factors involved, you also cannot wish your way to success or investment growth.
The Stock Market Is For The Rich
If you have placed the stock market in the same boat you place golf in, then you might want to rethink your stance. Is the stock market home to many wealthy people? Yes. However, you would be dong yourself a great disservice if you are waiting until you’re wealthy to invest in it.
Investing simply requires setting aside cash and this is no different than going to any other market. You can visit the market with little funds, and you can do so with more funds depending on your financial position, your risk tolerance, your investment needs and so on.
The stock market is accessible for the general public and anybody can make impeccable returns from it.
Everything That Falls Would Rise Again, And Vice Versa
The stock market does not operate under the law of gravity. The idea that you must always buy shares when their prices are low because they would always rise again, has kept many investors shooting themselves in the leg.
A look at some of the biggest company names from just a decade ago and where those names are today, would give you an understanding of this. A stock that has a historical record of performing well that begins to fall, is not a signal to a new cash cow.
There are many reasons for shares to go down in value such as poor management, financial challenges, or loss in market relevance, and a lot of them can be disastrous to the success or failure of the entire business.
It is therefore important that all investors garner all the necessary knowledge of the stock market and not rely or hearsay. Better safe than sorry.
Written by Lawretta Egba.