Dark sides of investing in the stock market?

The investment in the stock market is nothing but a sort of big gamble, especially if you think about the volatile difficulties during the trading. It’s the place where people buy and sell shares and through the transaction, gain profit or maybe lose some amount depending upon the speed of that stock on a specific day.

Historically, the stock exchange has delivered generous returns to investors over time, but stock markets also go down, presenting investors with the likelihood for both profits and loss; for risk and return.

Stock Markets are the foremost fascinated profession or side income sources, it also acts as a wealth generation source for several people across the world. If you’re into stock markets you may have heard the words trading, investing, day trading, swing trading, scalping, micro scalping, positional trading. Investing also has many types like future investing, short-term investing, medium term investing.

However, the stock markets are often volatile, meaning returns are never guaranteed.

You can decrease your investment risk by diversifying your portfolio to support your financial goals.

Investing may be a rollercoaster ride, but once you combine finance and emotions, bad things can happen. Participating in trading stocks may result in anxiety, depression, and other concerning sorts of psychological state.

Here are some things to account for when investing because investing in your psychological state is equally as important as investing in your future.

Your emotions can get the simplest of you.

A lot of millennials are throwing a lot of money into the stock exchange as if it’s a get-rich-quick scheme, which simply isn’t the case.

It’s a long-term game, and if we play the sport as if we will turn $500 into 1,000,000 overnight, we are sadly mistaken. Not enough education is taught in class about finances, which is why later in life, many individuals struggle.

Finances are a really stressful part of life. When you’ve got money, life is straightforward to work and take bigger risks. But when that cash runs low, your psyche starts to panic and enter fight or flight mode. It’s essential to be self-aware and understand what you’re ready to lose.

Ignoring stocks when the market is down is the best strategy.

Assuming an investor hasn’t placed his or her money into a highly volatile over-the-counter stock, they might attempt to just ignore checking their account entirely.

Playing a long-term game within the investing world will end in higher psychological state stability because money can drive us up the walls.

The majority of investors make buying or selling decisions during haste which causes them to calm down with less profit or maybe loss sometimes.

There are few stocks that have always added wealth for all investors. Whether you bought a stock 10 years ago or 1 year ago. Short-term investments like but 1 year are considered volatile and typically erode investor’s money.

Here are 1-year stock charts of some companies

  1. Shree Cement Ltd

2. Eicher Motors Ltd

3. MRF Ltd

All these companies have performed well and are multi-baggers within the last 1 year. There has been a continuing demand for these companies’ stocks within the market. don’t get amazed if your broker still recommends anybody of those stocks for long-term holding. Most of those companies are consistently posting growing results thereby showing improving profits and business stability.

But wait, this is often only the brilliant side of the image. Have a glance at these company’s stock charts.

The darker side

Investing seems to be stress-free from the outside but the first time investors find this a myth. Investing takes time, effort, and patience. Everyone works hard to earn money and then invest it so that the money can grow and we can fulfill all our necessary needs like buying a house, buying a luxury car, going on vacation. 

To make mistakes is a human tendency, but we always learn from mistakes. First-time investors often make mistakes because they have a lack of knowledge and experience. People usually think Investing in companies when they are at a high will help them earn money. But this is not always true. Below are some examples.

  1. Jet Airways

Jet Airways (India) Ltd is an Indian international airline based in Mumbai. It was once the largest airline in India.

Stock Closing prices as of 01-Jun-2018 was 346.90 INR. And for today 01-Jun-2021 is 120.80 INR.

2. Yes Bank

Yes Bank Limited is an Indian private sector bank headquartered in Mumbai offers a wide range of banking and financial products for corporate and retail customers through retail banking and asset management services.

 Stock Closing prices as of 01-Jun-2018 was 339.65 INR. And for today 01-Jun-2021 is 13.65 INR.

3. Reliance Communication

Reliance Communications Limited (popularly, RCOM) was an Indian mobile network provider headquartered in Navi Mumbai that offered voice and 2G and 3G data services. Rcom has closed its telecommunications business in 2019 and filed for bankruptcy.

Stock Closing prices as of 01-Jun-2018 was 13.7500 INR. And for today 01-Jun-2021 is 4.2500 INR.

4. VideoCon

Videocon Industries Limited is an Indian multinational conglomerate, headquartered in Mumbai.[3] The group has 13,000 manufacturing sites in India and plants in other parts of the world.

Stock Closing prices as of 01-Jun-2018 was 7.85 INR. And for today 01-Jun-2021 is 7.35 INR.

5. PNB

Punjab National Bank, abbreviated as PNB, is an Indian government-owned bank. Its headquarters are in New Delhi, India. 

Stock Closing prices as of 01-Jun-2018 was 76.15 INR. And for today 01-Jun-2021 is 43.35 INR.

In all of these companies, if investors had invested their money when the stocks of these companies were at height then they must have faced huge losses. There are many examples like these.

Most of such companies failed to deliver results according to the investor’s expectations. For example, RCOM has nearly 40,000 Crores of debt which reflects a very bad image among investors.

Here’s the key to making wealth. If anyone wants to make wealth find a corporation whose business is emerging and performing reasonably well. Stay invested within the company until fundamentals don’t change. When the company’s business improves and performs better then its stock price automatically follows it.

Insider Information is one of the keys in the Stock market.

A corporation has decided to announce their financial results the next day and therefore the results are way better than the half-moon. Does one think such news is going to be kept as a secret? The highest officials are going to be knowing the secrets right.

There are people within the corporation who leak that quiet information who aren’t allowed to trade themselves. Those informers leak the knowledge and that they get a huge commission.

Now once the market opens those people start buying shares of a corporation worth rupees lakhs or maybe crores leading to liquidity available which ends at huge surge available prices. Retail investors think that today’s results that’s why a stock is surging up. But retail investors never know something else is going on. Retail investors finish buying good quantities within the market.

Now once the results are out that group of individuals starts offloading the stock bought by them in early hours. They need to make a good amount by investing early. Now they’re going to start selling the stocks in huge quantities which ends up causing the available price to travel down heavily.

Retail investors got stuck assuming they had bad luck, the market was up as soon as they entered it subsided.

Within 3–4 hours the group finishes up making huge money without investing one penny! just a few small commissions to the informers.

Companies need years to earn such a lot of profits, A retail investor needs 30 years to get profits, those quiet groups make within a few hours of trading.

No matter what you do, if you do not have the right knowledge about the subject, there is a good chance to make silly mistakes. By educating yourself against the most popular myths, you can save a considerable amount of time, effort, and money that you would have otherwise wasted.

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