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What are the mistakes that should be avoided while investing in a stock market? January 06 2017Market Psychology

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Why people lose money in stock market?

“That’s the problems with myths, they started because someone misinformed of the truth, truly believed in them.”

In theory, everyone is aware that less knowledge of something is more harmful than no knowledge of it, similarly an incomplete understanding or interpretation can do more damage than good.

Let us apply this theory to stock market and all that has been said about it. Earlier there was a dearth of information in the market and now, there is an abundance of it. As the age of internet dawned upon us, so did the era of excesses. As a result, we have become too dependent on the judgement of the search engine. When was the last time, you surpassed the first page of the search engine to find something. We rely on what we read and presume that the facts are vetted prior to being published.

 “If it is on the internet, it must be true.”

This belief has led to the creation of many myths that still roam around town disguised as the truth.


It is noteworthy that most of the common notions about stock market trends are based on myths, a fact that renders it completely hollow. In retrospective, such misinformation leads to constant demise of probable profits in the market. When decisions are based on an individual’s perception or somebody else’s interpretation of events, their success relies on pure luck.

Contrary to popular belief, many investors do listen to the advice of experts, but fail to follow it. Moreover, even when they do follow an expert’s advice, they do it without questioning the logic that goes into forming that advice.

How do you deal with missing out investments ?

Information can be your best friend or your worst enemy, it all depends on how you use it.  The majority of small investors is unable to recover from losses due blindly following stereotypes. Lack of education and awareness has caused many investors their hard earned money.

The thing is a lot of people are talking about making money in the stock market,but no one is talking about how not to lose it.

So, basically we are all taught how to fly before actually learning how to walk properly. The promise of a treasure is made, but we are never taught how to read the map to it.

There is a huge gap in the market, one that has been ignored for many years.

# Lack of educators as well as students

There are many preachers, but not enough teachers available. There are courses that enable you to perform a technical analysis, but nothing that allows you to be updated. There are either experts or amateurs.

 

# Improper structure of information

The data available to the investors is either presented in a form too technical for the average investor to understand or just ramblings of self-proclaimed mavens. There is no structure that speaks to an average investor in a language they can understand, but also provides them with real information.


# Conflict of interest

The interest of the investors is kept subordinate profit by individuals as well as companies, this creates distrust among the investors which does no one any good.


The Rejoinder 

When there is a crack in the wall, it should be filled. Therefore, at this point, what is needed is mentors who desire to educate the investors and not just earn from them. At the same time, we need investors who are decisive. If you put your money in it, put your brains in it too- all in or all out.

There has to be a peripheral shift in the emotion behind the discussions, instead of complaining about losing money, the investor needs to understand why that happened. If you know what went wrong, you can try to avoid it next time.


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