Over the years, volatility has become a well-known characteristic of the Indian stock markets. However, this has led to creation of various myths that scare you away from trading in the stock markets. The unfortunate part is that some of these myths spread like virus, keeping people away from the markets. The problem is that people believe these myths without actually checking whether they are true.
Please note that what people told you about the stock markets could just be another untrue myth. Here are 5 common stock market myths that you feel are true:
1. The stock market is a gambler’s zone
You want to hedge a bet and win a fortune, play a round of roulette or invest in the stock market. Yes, this has been one of the oldest and most popular myths about the stock market, which has kept many potential investors away from it. Investment is a logical and simple concept. As an investor, you must understand the following three crucial points:
• Investment in the stock market is a well thought out and strategic process, which involves smart decision-making.
• You spread your investments in various asset classes to mitigate market risks while maximising returns from investment.
• Investment is about thinking long term and planning for it from today.
If you plan your investment strategy properly, diversify your investment, research the financials of the companies in which you want to invest, then where is the risk? Knowing about the financial situation of companies is no rocket science in today’s Internet age. If you are finding it difficult, take help of a professional expert. Thus, investing in the stock market is one of the best ways of maximising your wealth. Please stay away from the myth that stock market is for gamblers.
2. Stock market is simply for the rich
Simple SIP plans for amounts as small as Rs1000 per month and easy investment options in OFS, IPO, shares, CFDs, and NCDs, do these sound like lucrative investment options for all or do you still believe the markets are for the rich? Stock market belongs to everyone. You do not need any qualifications to invest and trade. All you need is a well-defined investment strategy and strong intention. Moreover, in an Internet-driven world, you are inundated with investor-education information on investment and financial planning. Thus, educate yourself about the markets and create your own wealth by investing in the markets. Leave the stock market myths to the gossip mongers.
3. Become an Investment Guru to Invest
No, this is not at all true. Please note that you do not need to be the all-knowledgeable industry guru to invest in the stock markets. You just need to a simple person who thinks logically and strategically about stock market investment. You have the Internet at your disposal, simply use it, and get educated. Keep things simple, simply stick to a particular industry or sector that you want to invest in and try to gain as much information as possible about that sector. In time, you will know much more about that sector than many other people. Simply repeat this exercise for different sectors. You will soon realise that you are an expert yourself and would have accumulated wealth by then. It is all about focussing and believing when it comes to the stock market.
4. Law of gravity, applied to the stock markets – What goes up must come down
Rules for apples cannot be applied for oranges. Indeed, stock markets operate in their own manner, but that does not mean that stocks that go up must come down one day. Please note that stock prices are nothing but a reflection of any company from a particular industry. Therefore, choose the company in whose stock you want to invest very wisely. If you choose a company with strong fundamentals and excellent management team, the stock price will likely continue to be on an upward trend. The key to this is the word ‘selection’.
5. Knowing little is good enough
If you want to invest and benefit from the stock markets, you need to know much more than just ‘little’, after all, it involves your hard-earned money. You don’t need to formulate the law of relativity to invest in the markets. Just put in a little bit of hard work, which involves doing homework on the companies in which you want to invest. You’ll be surprised at the success you’ll achieve post the hard work. Conduct preliminary research on the stocks, read information on investing methods, know more about the markets, and be an educated investor.
In case you are finding it difficult to sail through the stock market, go to a professional expert who’ll not only help you sail through successfully, but will also ensure that your money multiplies faster.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.