The greatest stock market myth is the idea that investing in stocks is a form of gambling!
The financial markets are often compared to a casino. Put some money on X stock and you might as well be playing craps!
If that's your impression, and it's keeping you out of the markets, consider this: If investing is organized gambling, it's one of the rare kinds where the odds are stacked in your favor!
Why is that?
Corporate profits are the key to understanding the investor's edge. By buying a share of stock gives its holder an ownership claim on that company's earnings. If those earnings go up, then the stock price will usually rise as well. Makes sense, doesn't it? Ownership of a company that has higher earnings should be worth more than ownership of a company that earns less.
An investment in the stock market comes down to this: It's a "bet" that corporate profits will rise! Based on the historical evidence, it's a pretty good wager! Not a guarantee by any means, but one where you hold house odds.
Still not convinced?
Maybe you're saying to yourself that just because corporate earnings rise in most years doesn't mean there aren't years in which they fall. True enough. But over the last 200 years, business profits have increased in far more years than they have decreased. And that's because the economies in the developed countries have expanded at a fairly steady pace with only several occasional setbacks from recessions.
And that means stockholders with a good mix of companies are more likely than not to make money!
Gambling just transfers money from a loser to a winner because it produces nothing ... excluding the severe doses of adrenaline!
On the other hand, investing increases overall wealth because the capital invested in stocks provides the initial funding for firms, which exist for the purpose to producing goods and services.
Copyright ? 2005 I.E.C. Haramis
Ioannis - Evangelos C. Haramis was born in Greece and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
recurring maid service Buffalo Grove ..There is so much involved in developing peak performance, that... Read More
If you're a normal human being, your need to feel... Read More
Is really not as important as to how you invest... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
I cringe every time I hear a novice investor tell... Read More
The stock market has been going up for more than... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Did you know you can make money (and a lot... Read More
Caught in a whirlpool and being sucked under. No life... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
Has your broker been calling you recently with the "great... Read More
Professional stock options traders use the term lean to refer... Read More
Every year I go to the Money Show in Orlando,... Read More
It depends on your level of understanding of the market... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
On Friday or Saturday evening my wife gets a movie... Read More
The stock market is very unstable at this time going... Read More
Economists know more about how the fragments of society work... Read More
I would like to share with the reader an article... Read More
As a novice trader, you'll often feel the need to... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
Regardless of the fact that the world's stock markets have... Read More
One of the great "secrets" of successful people is discipline... Read More
Options trading can increase the profits you make when trading... Read More
One of the most believed bits of conventional wisdom from... Read More
premium house cleaning Glenview ..If you are fed up with early redemption charges and... Read More
We all know the expression, "My country, right or wrong",... Read More
I read a comment by a forum member on another... Read More
If you were to find that you had some severe... Read More
If you have been watching the stock market at all... Read More
I often play a little game with myself when I... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
A common problem I often see when working with living... Read More
What are you thinking when it comes to your no... Read More
What does it take to be a stock trader? It... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
Disclaimer: Please note that I do not necessarily purchase, own,... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
When you become interested in a stock or mutual fund... Read More
Every day in any financial publication you will find the... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
Suppose your position has made a big move and you... Read More
The broker told me not to sell because the mutual... Read More
It is finally catching up with them. The brokerage companies... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
Hello Inflation, it has been awhile, I see you on... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
Economists know more about how the fragments of society work... Read More
Stocks & Mutual Fund |