Home » Finance » Stock Market

Why Most People Lose Money in the Stock Market

Oct 30, 2007
Mention the word 'stocks', and many people have painful experiences to narrate. Stories abound of how people have had their life savings wiped out overnight. Or money they have borrowed to buy a 'sure, hot stock' was lost when the stock suddenly took a nose dive. Ever since I was young, my parents and grandparents warned me to stay away from the stock market, and tell me that it is safer to leave my money in the bank.

So, is it true that most people lose money buying stocks? The answer is Yes! But how can this possible? We know that the stock market as a whole has been consistently increasing in value for the last fifty years at an average rate of 10% and 12.08% in the last twenty years! The main reason is that most people who purchase stocks are ignorant of the business behind the stock. It doesn't mean they are not intelligent people. It's just that they lack the 'financial intelligence' to understand, analyze and buy businesses.

Let me ask you this question? If a whole bunch of people with no advanced driving skills were given the keys to drive a Formula One racecar at 230km per hour round a circuit, how many would crash after a few rounds? Probably most of them! Well, this is exactly what is happening in the stock market today! The majority of investors are made up of the general public who enter the market looking for riches without any financial or business training and, as a result, crash and burn! To these people, investing in stocks is indeed a high risk, sure-lose venture. They treat the stock exchange like it is a casino.

So without financial and business training, how do most people make decisions on buying and selling stocks? The answer is based on fear and greed. It is the combination of ignorance, fear and greed that motivate people to buying a stock when the price is too high and selling it when the price is too low, resulting in a loss.

We have to know that when we buy a stock, we are actually buying a share,
an ownership, in an ongoing business. Instead, most people treat stocks like lottery tickets, buying and selling based on predictions of whether the price will go up or down in the short term. Because stock prices go up and down randomly and erratically based on world events, there is no way anyone can consistently beat the market by attempting to read! Which is why, in the long term, the average stock player loses money.
About the Author
Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his million dollar secrets and claim your FREE bonus report 'Get Out Of The Rat Race Now' at Secrets Of Self-Made Millionaires.
Rating:
Please Rate:
(Average: Not rated)
Views: 153
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources