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.
same day cleaning service Mundelein ...It has been said that low cost or even free... Read More
You remember (they show it on TV every year) the... Read More
Unfortunately, most of you who are reading my column are... Read More
When it comes to stock market trading it PAYS to... Read More
The debate rages all over Eastern and Central Europe, in... Read More
One of the main reasons many of us get into... Read More
If you want one.And I don't recommend any broker with... Read More
There can't be many traders who haven't at least considered... Read More
Right now there doesn't seem to be any "gold fever".... Read More
I'll bet with almost anyone that has stocks or mutual... Read More
The bear market that showed up at the end of... Read More
The trading method you employ to approach the stock market... Read More
From the book 'The Stockopoly Plan' by the author Charles... Read More
We all know that emotions control every decision that an... Read More
Today's society gives special recognition to alcoholics, sexaholics, binge-aholics, shopaholics,... Read More
Forget making a profit; instead focus on the income provided... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
To become a successful trader you must have some kind... Read More
For years investors have been taught to look into the... Read More
"Buy and hold" is one of the most heralded investment... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
I don't know what kind it is, but I saw... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
Just about now everyone is confused as to which way... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
eco-friendly cleaning service Mundelein ...Every day in any financial publication you will find the... Read More
The trading method you employ to approach the stock market... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
If you have talked to a stock broker or financial... Read More
How often have you come across an advertisement or e-mail... Read More
Money management starts with protecting your capital, realizing profits and... Read More
We keep hearing about this bear market and that the... Read More
Intervention. Now don't let that big word scare you. The... Read More
When you become interested in a stock or mutual fund... Read More
To begin, you might look at playing the stock market... Read More
If you were to find that you had some severe... Read More
As a novice trader, you'll often feel the need to... Read More
In my opinion, due to the volatility of stock market... Read More
The Surgeon General of the United States says that smoking... Read More
A recent cartoon in my daily newspaper showed two guys... Read More
Just about everything you have been told about Social Security... Read More
"Buy and hold" is one of the most heralded investment... Read More
When will the stock market stop going down and start... Read More
On November 17 I bought 7 different mutual funds and... Read More
So you're started trading, you bought some positions with your... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
Suppose your position has made a big move and you... Read More
A common problem I often see when working with living... Read More
I made my very first investment in the stock market... Read More
Stocks & Mutual Fund |