You have no doubt heard many «experts» say that sex sells. Well, I don’t know whether or not that is true but I do know that fear sells. That is one of the reasons there is so much written about the risks of the stock market.
But, is it true? Is the stock market really such a scary place or is that all a marketing ploy to get us to hire a certain firm, watch a certain news show or buy a certain book so we don’t make any mistakes with our money?
Based on what I have been able to learn I would say the truth is a little in between. Sure, there are risks of the stock market but many of them (most of them?) can be avoided if you know what you are doing.
Too many inexperienced investors look at investing in the stock market a little like going to Vegas to gamble. They don’t bother to learn anything, they dive in with both feet and they take advice from «experts» or they follow the «hot tip» from their brother- in — law or cab driver.
Then when the inevitable happens and they lose their money they see that as «proof» that the stock market is really risky.
But look at it like this: we all know that driving a car can be dangerous but we also know that it is even more dangerous if you don’t know what you’re doing and / or you are impaired in some way.
The stock market is a lot like that. If you take the time to learn what you are doing, go slowly and build your skills and don’t take unsubstantiated advice from someone who really doesn’t know what they are doing you can virtually eliminate any risks.
One trait that some of the most successful investors of all time have in common is that they are very afraid of risk. Most of them would be far more willing to miss out on an opportunity rather than rush in unprepared and risk losing any money.
They will let the «next big thing» go if they don’t feel they have enough information to make an intelligent decision as to whether or not they should actually invest in it.
How many investors do you know who would be willing to do that? Are you willing to do that? With all due respect, probably not. Few investors are that disciplined in their investing habits.
The opposite is true more often than not; someone gives an investor a hot tip that has to be acted on right away. And that is what the investor does, they act.
They don’t take time to carefully look over all the facts and gather the information to determine whether or not the hype is justified, they just act.
So do yourself a favor and make sure you get the most out of your investing. Take the time to educate yourself, learn what to look for in any given investment and don’t stray away from that criteria no matter how good of a hot tip you get.
If you set your criteria, hone that criteria over time and don’t deviate from that criteria you will quickly find that the stock market is not Vegas but you can still clean up and risks of the stock market can then be virtually eliminated.