Lesson # 19 : Why People Lose Money in Stocks?

There are two types of people in the stock market. There’s your average day trader who books his profits at the end of the day. He’s played in futures and trades in probably a lot more than you do and then there’s the investor which in all likely hood is you.

The reason why most people lose money in stocks is because they buy stocks not as an investment but as a trader. The problem is that a trader knows where the market is headed the average investor does not. The solution is relatively simple – If you are an investor invest for the long term and invest continuously. 

The Golden rule is that never invest in companies you do not understand and absolutely never buy a stock simply because it comes cheap.

Remember that not every penny stock is going to be worth your investment and not all stocks have the potential to grow into a Berkshire Hathaway or Microsoft.

Remember that investments are going to reap returns in the long turn and as long as your portfolio shows an average return of say 18 odd percent annually you are bound to earn high returns in the long run.

Happy Investing

Udit Sabharwal { On behalf of Doodle inc}