Why You Should Avoid The Stock Market

by Pam on July 30, 2012

How many people do you know make a living from the stock market? My guess is that you don’t know very many, if any at all, and that is because it is getting harder and harder to make money. This is not because the stock market is not a great place to triple your money, it is just because too many people are greedy, and greed is never a good thing when dealing with the stock market.

Mistakes Stock Market Investors Often Make

One of the biggest mistakes most stock market investor make is that they put their money into speculative stocks. What this means is that you never know what the stock is going to do and odds are that the stock’s price is going to drop. Now, this would be a good thing for you if you decided to short the stock, however, most investors don’t and therefore, they lose money. This is exactly why you should avoid the stock market as much as you possibly can. Unless, of course, you think you are less prone to greed than the majority of the world’s population.

The fact of the matter is that most investors think they know the best way to make money in the stock market but they are their own worst enemy. Just know that staying out of the stock market will give you just as many opportunities to make money and you need to explore all of them.

One thing that a lot of people think is that the more stocks they buy the better their portfolio looks. Just keep in mind that the more stocks you buy the more money you have at risk.

So, after knowing the risks, if you still want to invest in the stock market, here are a few things to keep in mind:

1.  Do NOT let greed control you.  Don’t treat it like gambling.  When your stock goes up, don’t get greedy and think that it will keep on increasing.  Instead, get out while you are ahead.

2.  Research Research Research.  Don’t trust your uncle’s second cousin who tells you that he has a great stock for you to buy.  Take NO ONE’s word for it.  Learn it yourself or stay far away from the stock market.  If you don’t have time or the interested in researching yourself, just invest in mutual funds instead and let the experts pick your stocks for you.

3.  Invest only what you can afford to lose.  If you have a thousand dollars that you want to play around with, fine.  But, make sure that you are not risking everything you have in the hopes that you will make a fortune using the stock market.  Once you have learned and you have a better understanding of how the stock market works, then, and only then, should you even consider investing more than your play money in the stock market.

While investing in the stock market can be lucrative, it isn’t for everyone.  That’s why there are so many alternative investments available on the market.  So, before getting all excited, please do take these tips into consideration.  Good luck!

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