Why do we invest in the stock market? The stock market is where the buying and selling of company shares takes place. We invest in shares to make money â either through a shareâs capital growth, i.e. the amount by which the share price increases in value over time, or through the dividends it pays to its shareholders. Most people believed that investing in shares at the moment is probably the best thing to do with your money with the potential high gains, rather than sticking your money in a bank and waiting for monthly interest. The benefits is enormous, whether you want to retire early, saving for the childrenâsâ education or paying off the mortgage, everyone has dreams they can achieve by saving. Investors trading view â âthe Intelligence VS the general public â The Intelligent Investors in the society could spend time on market analysis, whether they are the uses of market models, Chartism analysis, price forecasting programs, or the search of inside information. Such traders would devote great amounts of time in life to actively trade and try to gain a potential profit from such strategies. As compared to the general public, they believed, that investing is too complicated, too difficult, or just too risky. They would not have such time or knowledge compared to the analysis to work out which share to invest, the massive amount of information available would cause great confusion to them. As a general rule of thumb they would just believed in âbuy low and sell highâ, but what if buying low and it gets lower? A form of new living lifestyle where people donât even work, but only trade on the market? With the increasing popularity of stock market trading, many humans have found a way to devote there life to, an investment in the stock market as a potential income resource. Many investors are know sitting in front of their computer and monitoring the market as a daily process and take the opportunity to gain potential profits, they will forget about work, the normal lifestyle that a human should have, and or even self isolated from the society. Such trends are spread over the society on a variety of ages, now even onto young teenagers. We hate to believe that our next generation would become lazy, non-active, dull life trading nerds that sits in front of the computer and monitors the market all day. What about the risks of investing? Did people put too much interest just into the potential gains of such investing opportunity, while thoughts about potential risks are diminished or even ignored? You run the risk of losing money if the share price goes down. If a company you invest in goes bankrupt, your shares could become worthless. But companies do not have to go under for you to lose money. Other investors may simply decide that the company is not worth its value, or perhaps because it is losing market share, and if enough of them think that, your investment will fall in value. Shares also tend to fall when the economy is deteriorating. Other risks that should take into account when investing includes: Overall economy, Industry specific risk, Individual company performance, Interest rates, Exchange rates, Market sentiment. Investing Performance on the overall society. Studies have shown that people rarely performs well on average in the market. Surveys have been conducted to seek whether the general public investors believed they will perform well on average in the market compared to its peers. Out of interest 80% believed they would perform better, but this canât be right! Infact only a few investors out of all will succeed in such a competitive market. Cases of winning and losing. There have been many cases heard about the winning and losing in the trading markets. You see people make millions on the stock market in such little time, and out of jealously you would like to be in a similar position and invest more of your money into the market. But what if you loss? There have been unlimited cases of people losing in the markets. They lose their whole life savings and even worst accumulate massive amounts of debt. Cases of people losing is enormous, they will get blamed for by their close ones, they would find no light in the future, perhaps they would even suicide one self to escape from such painful feeling. What about Stock Market Crashâ¦â¦ Market Crash have been the image of horrors stored in the minds of millions. A popular one would be the mystery associated with the 1987 crash, Black Monday is the name given to this Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell dramatically, and on which similar enormous drops occurred across the world. Many have noted that no major news or events occurred prior to the Monday of the crash; the event seems to have come from nowhere. Debate of possible reasons comes into discussion, concerning human rationality, the efficient market hypothesis, and economic equilibrium. Some reason believed as to why it happened? Cause #1: DERIVATIVE SECURITIES People investing majority in derivatives rather than stocks. Stability of stock markets and derivatives markets must operate in a sync way, this was a major factor behind the crash. Cause #2: COMPUTER TRADING The use of computer trading was blamed, where large amounts of stocks were processes by the program following a trend. Cause #3: ILLIQUIDITY Great amounts of stocks that sellers wanted to get rid of while buyers was insufficient at the time. Liquidity may have had a significant effect on the price drop, since investors had overestimated the amount of liquidity. Cause #4: U.S. TRADE AND BUDGET DEFICITS Another trigger to the crash was the announcement of a large U.S. trade deficit on October 14, which led Treasury Secretary James Baker to suggest the need for a fall in the dollar on foreign exchange markets, causing foreign markets to close out their positions. CAUSE #5: INVESTING IN BONDS AS AN ATTRACTIVE ALTERNATIVE Investors changing position and investing in long term bonds was a big withdraw on the stock market. CAUSE #6: OVERVALUATION Investors believed that stocks in the market were highly overvalued and a revaluation of stock investing was in mind. With such different perspectives we can understand why different people would like to trade in the stock market. While trading we must take into account the potential gains as well as the losses. We should also reflect on what our lifestyles should be positioned when trading on the stock market. Donât have a believe in which you see people getting mega bucks on the market, and you think you could be just like them if you followed. Donât forget the market crash. Are you sure it wonât happen again? We reach a state of mind and have a thought, âIs Investing in Stock Market a Pathway to Heaven or Hellâ?, or do we treat it as a gambling, in which the bet is âOur Lifeâ. I let you decide for yourself. Feel free to post any comments, or opinions you may have. I am more than happy to hear. Billy Ho
Your title suggests emotion, your paper lacks the fire the spirit the enthusiam of heaven or hell of the market. It reads deadpan academic style. Stay tuned for my new book: Investing in the Stock Market- pathway to sex or just a hand job. (sorry guys, point me to the joke thread)
billy billy billy WHY art thou here Billy this site is called ELITE trader we are these elite traders *we are a proof that what you just wrote is a horrible terrible lie. * 95 % of elite traders are not elite traders
Billy im sure your a very inteligent person and im gonna recommend a book to you. Its called Capitalism and Freedom by Mitlon Friedman. I totally disagreed with you entire "essay" however as much as i tell you the sky is blue if you truly believe it is "red" in your eyes nothing i say or anyone else says can change your subjective truth. My point... is that as human beings regardless of your religious beliefs ....only require food and water to survive. everything else is "extra". i have traveled the world and met the poorest people in terms of liquidity or net worth but franky they are happier with their family and way of life then some people i have met with hundreds of millions of dollars. no one is forcing you to work.. life is not about working its about living... have you ever heard of the income and substitution effect?