“When a thing ceases to be a subject of controversy, it ceases to be a subject of interest.”
The stock market is the most popular and the most talked about source of investment in the world. Everyday, millions of investors and traders are drawn to this market, in the hope of making money. As a result, the stock market is always in the news for some reason or the other. One of the casualties of such immense popularity is that a lot of rumours and myths about the stock market are always in circulation. Controversy follows the stock market wherever it goes.
It is important for potential investors to be able to sift through the controversies and find the authentic piece of information. This blog has been written with the intention of helping you debunk some of the greatest and the most atrocious myths about the stock market.
Let’s get started then!
- Investing in the stock market is equivalent to gambling
I am sure you have heard this statement before.
This is one of the most common and the most widely believed myths. It is also one of the major reasons why amateurs tend to stay away from the stock market. However, it could not be more wrong. To understand why, let us first attempt to define the two concepts clearly.
Stock or share refers to partial ownership of a company. Often times, companies find themselves in a situation where they do not have enough retained earnings or funds of their own to fund their business plans or productive activities. In such times, they resort to external funding in the form of equity. Companies sell small fractions to outside investors in return for their money.
The intention behind such transactions is that when the productive activity comes to fruition and the value of the company increases through the inflow of profits, the shares or fractions of ownership that have been sold to the shareholders also increase in value severalfold. Thus investors who want to sell off their shares can do so at a considerable profit.
On the other hand, gambling is termed as a zero sum game. There is no concept of value here. The winner of the gamble simply gets the entire pot i.e. money is transferred from the loser to the winner. No value is created as no productive activities are undertaken. Thus, it is very wrong to confuse gambling and investing, and this is one of the most important myths that need to be debunked.
- You need money to make money
The stock market is so controversial an existence that people sometimes misinterpret it. Most of the investor we hear about, and the developments we hear about in the stock market are of high value. As a result, we often lose sight of the fact that the stock market is actually meant for everybody and not just the rich people.
Trades and investments can be of any value. While starting off in the stock market, you do not need any strong financial backing. All you really need is the knowledge and the correct intuition. When Warren Buffet started off, he did not possess a million dollars. However, the good thing about the stock market is that when your choice of stock is correct, your investment can increase severalfold. You can start off with as little as Rs. 10,000 and still make three or four times that amount.
For amateurs and newcomers, it is important to remember that the starting capital does not matter. All you need is the requisite information and knowledge. So, if you are interested or wish to make your own mark in this market, you should chase the knowledge and not the money. Fortunately, Finnovationz brings the answer in the form of a beginners course to the stock market. This course is absolutely essential for any potential investors out there.
- A little knowledge is better than none
You may have encountered this statement before in other contexts and other fields. In most cases, it is true. The acquisition of knowledge is a cumulative process. Often times, going through the entire period is the only way of learning what it is about. However, even though is saying may be relevant in other walks of life, it can prove disastrous in the stock market.
The stock market is tempestuous in existence. It is like a storm that can suddenly change direction without warning. As a result, approaching the stock market with less than perfect information can prove catastrophic for the investor. While learning on the job is a common practice, doing this in the stock market opens you up to the potential for limitless losses.
My advice for any newcomers or potential investors out there is to first acquire all the relevant information and knowledge before making your first move in the stock market. This, of course, is easier said than done. The massive proportion of operations in the stock market make it difficult to understand where to start. Fortunately, there is an answer for such problems. For beginners, there are courses on the internet for the purpose of giving you an introduction so that you can better manoeuvre the intricacies of the stock market. Finnovationz is one of the best among its peers and is the one stop destination for all your investing needs. So, without further ado, sign up and get started.