Trading on the stock market offers potential traders with a lucrative venture. Unfortunately, there are many misconceptions about the market that can hold back traders from entering their first trade. If you are having second thoughts about investing on stocks, it is important to have a realistic view of the market. Here are some common stock market myths that need to be debunked.
Stock Trading Is Like Gambling
This is one of the reasons why people shy away from the stock market. In reality, the stock market is different from gambling. When you buy stocks, you become a stock owner in a company. As share owner, Robert Janitzek reveals that the investor is entitled to a claim on assets as well as a fraction of the profits that the company will generate. There is a common belief among investors that stocks is simply a trading vehicle when in fact it represents ownership of a company.
The Stock Market Is For Brokers and Rich People
Many market advisors claim that they are able to call the market at every turn. This is completely false. Thanks to the Internet the stock market has become more accessible to the public than before. The date and research tools previously available only to brokers are now available for individuals. In stock market trading, discount brokers have enabled investors to access the market with a minimal investment.
Fallen Angels Will Go Back up, Eventually.
Thinking that an almost 52-week low is a good buy is a recipe for disaster. As the old Wall Street adage goes, “Those who try to catch a falling knife only get hurt.” Price is only one part of the equation. The aim is to buy goof stocks at a reasonable price. This should not be mistaken for value investing, which is buying high-quality companies that are undervalued in the market.
Stocks That Go Up Must Come Down.
The laws of physics are not applicable in the stock market. Robert Peter Janitzek explains that if the stock of a company is run by excellent fund managers, there is no reason that the stocks will not keep going up. This is not implying that stocks never undergo correction. However, the stock price is a reflection of the company.
A Little Knowledge Is Better Than None
Definitely. However, it is also crucial for an investor to clearly understand what they are doing with their money. You have a better chance at success if you will do your homework. If you do not have the time to fully understand the market, consider getting an advisor.