STOCK MARKET RUMORS BUSTED

A lot of times, those new to investing have heard a lot about the stock market. Some of these are true, while some are hoax which are deeply in contrast with the first step in venturing into the field—to have a realistic comprehension of the market. To serve as a guide, below are a few usual bluffs about bourses.

Investing is synonymous to a bet

The idea of investments as a gamble is one of the leading reasons whypeople tend to be hesitant about trying to own a stock. Primarily, it is crucial to remember that buying a stock means having a share in a certain company. It gives the person rights over an entity’s assets as well as earnings. Because the process is more commonly associated with a mere trading vehicle, its main essence is often neglected.

Stock prices also tend to shift from time to time as investors prioritize how profits will affect shareholders. This is where company assessment enters the picture. Besides prices, there are also long-term figures that should be considered to ensure that it is worth the current value generated by its profits. Gambling, on the other hand, is basically taking cash from the loser and handing it over to the winner, hence no value is obtained. Unlike investing, it has no contribution to the overall health of an economy, which is derived through competition and productivity.

The market is solely for the rich

This belief, according to advisors, is entirely false. Given the evolution of internet, the market has been more accessible to the public at present. There is also a wide array of research tools and information available to ordinary individuals who wanted to begin investing. Moreover, assistances such as discount brokerages and robo-advisors are also there for an affordable minimal starting amount.

A recovery will always save you

Regardless of the reason, it is risky especially for newbies to get lured by the idea that a stock that has been constantly on the low is worth buying, fueled by their expectations that it will soon go into rebound. For example, you are deliberating on two stocks. The first has been on a high last year at $50 but has fallen by $10 since. The other one, meanwhile, is from a smaller firm but has been consistently rising, going from $5 to $10 recently. Unfortunately, many will tend to choose the former, thinking it will soon climb its way up again. This mentality is considered as a cardinal offense in the field, as price is only a small portion of the whole investing progress. The goal should be being able to acquire something of value at a reasonable price.

Stocks that go up are bound to fall eventually

The stock market’s rule is not the same as physics as there is no gravitational pull that will cause a downturn for those on a surge. This belief might result in missed opportunities, and while it is normal for stocks to undergo a correction, the point is its price will always be a mirror of the firm it represents. So if you stumble upon a good one managed by an excellent team, there is no reason to doubt its continuous rise.

A little knowledge will keep you secured

Although a bit of information is better than nothing, but since the stock market deals with money, it will be wiser to have complete awareness of what you are doing with your funds. If you lack the time, hiring an advisor would be the best measure, as the cost you will pay for this is relatively lower than what a wrong decision could cost you.