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For many, the stock markets are a place where you can profitably buy stocks that have fallen in price, although this decision in itself is controversial. Despite the great risks and the associated large financial losses, many of our compatriots continue to "play" under the influence of fallen shares.
However, the lack of any experience, and even the simplest knowledge in this area, forces many people to contact management companies, this option can be considered the most beneficial for those who have just begun to get acquainted with the market and its rules. However, there are enough private investors who are ready to buy shares directly, despite the lack of experience and knowledge.
Investing is so easy, but learning to assess the risks involved is much more difficult. The myths about the stock market, generated by popular rumor, also contribute to this unenviable state of affairs. They should be discussed to prevent gamblers from making hasty decisions with dire consequences.
Trading on the stock exchange is just an occupation. This myth is as pervasive as it is widespread. The most amazing thing is that this is true. After all, today you can play on the stock exchange using the Internet without leaving your home! In addition to a computer and Internet access, you only need a special program. But the point of all trade is not at all a game, but earnings. On the market, there are dealing organizations and brokers who replace these concepts in order to attract new clients. Free seminars, consultations are held, an advertising campaign is organized, allowing customers to wear "rose-colored glasses". Gullible newbies are diligently told how much can be gained, while the greater risks of losing are hushed up. But making money on the stock market is a rather difficult task, it will be more difficult than making scrambled eggs. If the player does not have serious knowledge and skills in this environment, then the chances of losing the invested funds are several times greater than winning at least something. The stock exchange is not a place where freebies are handed out. Weighted investment decisions are in the price here.
Investing in stocks is a kind of gamble. This myth forms a bundle with the previous one, giving rise to an opinion about gambling, akin to what is present in a casino. And this statement is also partly true. Those investors who have just come to the stock market and, without having knowledge, make decisions relying only on luck, can really be guaranteed a thrill. But can such people be called investors at all? Rather, they are players who, in fact, do not differ from their casino colleagues. It is hard to deny that ingenious gambling systems generate lucky ones who leave casinos with a fortune. But the absolute majority, making bets, pursue other goals - entertainment or just relaxation. It is for this that you pay out of your own pocket. But the stock market is no such exception. Here you can play, or you can earn, it all depends on the attitude. But one must understand that a person who is going to earn money, but at the same time not realizing the basic mechanisms of the market, is still the same player. And the receipt of income will last exactly until the moment when the changeable fortune does not turn in the other direction.
You don't need to know a lot to trade successfully, the basics are enough. If you think that investments are a kind of gambling, then it is logical to conclude that there is no need to know a lot for it. But if there is only a general understanding of the processes, investing really becomes a kind of lottery or roulette. To the uninitiated, it may seem that the movement in the market does not correspond to any particular logic. In fact, practically everything on the market is interconnected, and the factors that affect an individual issuer will certainly affect the price of its shares. In order to fully understand all the interconnections of the market, one must constantly be in the learning process. Initially, it is worth paying attention to seminars or studying specialized literature, and only then continue to comprehend the basics based on personal experience. Trying to make money in the stock market without studying a few relevant textbooks is akin to driving a car without knowing the traffic rules. At the same time, the opportunity to become an experienced player in the market does not at all depend only on the number of books read, it is important in practice to be able to apply the information and lessons learned, while drawing conclusions from, alas, inevitable mistakes.
Profits in the stock markets reach hundreds of percent. Investors, armed with knowledge, come to the stock markets in the hope of increasing their bank account, if not hundreds, then dozens of times. However, such a statement is just a myth; it is unrealistic to earn hundreds of percent of the profit here. You should not rely on the experience of the 1990s - 2000s, when Russian investors really received three-digit income figures. It should be admitted that in those days the growth of the Russian stock market was an exception, albeit a pleasant one. The phenomenal growth comes at a price, as is the case today. However, even now, an abnormally high yield of hundreds of percent is possible, such indicators can be achieved in a falling market. However, one should not forget about the attendant risks that make it possible to lose, if not all capital, then a significant part of it.
Serious income is possible only through speculative operations. Indeed, you can find people on the market who make 1-2 thousand percent per annum. This is the real earnings of an intraday trader, or a speculator specializing in day fluctuations. Stock slang dubbed such people scalpers. Phenomenal interest rates are not difficult to obtain. For example, stocks rose in price by 5% during the day, but on an annualized basis this gives as much as 1825%. But where are the guarantees that tomorrow the same phenomenal loss will not occur? As a result, experienced speculators earn no more than 100% at the end of the year, but most of the intraday traders are lost or are content with crumbs. But their sad fate did not prevent this myth of the emergence of income from being born precisely through speculation. But it is only worth remembering that a hobby for speculation for a novice trader can be disastrous. As the number of transactions increases, so does the number of decisions made. But for a novice speculator, such a multitude of decisions will inevitably be wrong, which will lead to a quick loss of funds in the account. Good theoretical training will not help either. People are so fond of trading that there is practically no time left for realizing mistakes and analyzing them. In addition, high trading volumes entail high commission costs for the trader. As a result, for the most active traders, oddly enough, "getting a profit" means just overbearing the commission. All these factors as a result lead to the inevitable - the beginner loses his money. It is also worth considering that those wishing to engage in intraday trading will inevitably give up their usual work - it will hardly be possible to successfully combine these two activities. Indeed, in the market, the movement of quotations is so sharp and impetuous that it requires the constant attention of those who seek to capitalize on fluctuations. Speculators watch for changes in the market during the entire trading session, which coincides in time with a regular business day. Often, unsuccessful speculations by a beginner are explained by nothing more than overconfidence. A couple of successful deals are enough to feel your own genius. The payment for this is large losses. On the other side are those market participants who are demoralized by the setbacks that have struck. They just lack confidence in their own abilities to achieve a result.
The movements of quotes are subject to the market gurus. There is a myth and market guru among novice investors. Supposedly, these market participants can anticipate stock prices. However, in its purest form, it is still a Western myth. Due to his youth, gurus have not yet appeared on the Russian stock market. However, this fact does not prevent some participants from creating a kind of stock idol from some analyst, completely relying on his advice in their investment decisions. And the point is not even that some analysts know the truth, because no one can accurately predict what will happen to the market tomorrow, but that some investors just need a leader who will lead them in making decisions. The famous author of books on the stock market, Alexander Elder, along with the traditional "bulls" and "bears", also singled out a separate group of investors, calling it "sheep". Their notable difference is that they are not capable of independent investment decisions. To do this, they need a kind of leader or "shepherd" who, with the help of his authority, would deprive them of the tiresome need for constant choice. In fact, the main task of analysts is not to help someone with a choice, but to provide additional information for thought. This is exactly the case when two heads are better than one. So, the forecasts of these specialists should be used only as an additional opinion, which can correct the personal idea of the market prospects, but in no way be decisive in making a decision. Here's an interesting fact. An experiment has been going on in America for several years. In the course of it, about ten of the best Wall Street managers and a dozen monkeys who are wonderful at playing darts gather. Managers use their knowledge and market analysis to form a portfolio of stocks. And monkeys prepare a similar result by throwing darts into a dart circle, in the various sectors of which the names of companies are indicated. The result of the competition is quite informative - monkeys have been winning for several years in a row.
A professional can always earn more than an amateur. This myth is a product of the previous one, about the guru. According to this statement, a professional asset manager, for example a mutual fund, will always earn more than any, even a skillful, private investor. This is actually not true. A private investor has every chance of surpassing the results of managers of large mutual funds if he observes all the rules of his successful strategy. It should also be remembered that institutional investors bear the burden of various legal constraints that often affect the quality of decision-making and governance. Thus, a mutual fund cannot be in the money for longer than a certain time, even if at this time the market is unstable or even falls. So in this aspect, the private investor has an advantage. Another point is that large funds buy and sell very large volumes of shares, which significantly affects the cost of order execution. If there is a need to make a small transaction for several thousand rubles, then most likely there will be a counterparty at a favorable price. But during the acquisition by the fund of shares for millions of rubles, the transaction is delayed for several days, which can cause deviations from the initial value. And it is much more difficult for mutual funds to react to the changes taking place in the market, they lose efficiency.
If the shares have fallen in price, then you have to wait a little - they will definitely rise soon. To destroy the previous myth, the private investor must make his decisions not on the basis of naive arguments, but solely guided by reason. The myth of the inevitable rise of fallen stocks is a typical and dangerous speculation. It is possible to justify this myth with various stories and arguments, but for an amateur investor there is nothing worse than making a "good" deal when the stock price is near historic lows. One brokerage saying even says: "Whoever tries to catch a falling knife can only get hurt." Let's say you are analyzing the shares of two companies, wanting to buy them. A year ago, the shares of company "A" reached their historic maximum of $ 50, now they are worth 10. But the shares of company "B" during the same time grew from 5 to 10 dollars. What should you buy? Most investors will choose those stocks whose price has fallen so rapidly, as they believe that the price will rise soon. But you should be aware that the purchase of shares just because there is a belief in the imminent return of the price is a road to nowhere. The main goal of an investor is to acquire shares at a reasonable price. If in doubt, take a look at the graph of the fall in Yukos shares or the American mortgage agencies Fannie Mae and Freddie Mac. Just think how much money you could lose buying shares in similar companies just because their quotes hit new lows.
Increased shares will sooner or later fall in price. This myth is the opposite of the previous one. According to it, those stocks that go up should soon inevitably fall in price. But in the stock market, you shouldn't follow the laws of physics. This stone thrown up there falls, according to the forces of gravity, but the situation is different with stocks. If the situation is normal, it is not affected by the crisis or the inflation of the stock bubble, then the shares are influenced by other forces, market forces. They pay attention to how successful a company's business is. If it goes well, managers have a reasonable policy, then there is no reason for the decline in stock prices down. Of course, in the end, all stocks will be corrected sooner or later. But you have to ask yourself - is the current downward movement a pullback before the uptrend continues, or is it the beginning of bankruptcy? In this situation, the decision made by the investor entirely depends on his knowledge and experience. It is they who make it possible to make money on the stock market, protecting market participants from the influence of its myths.