The big secret is that the stock market is a casino. People play these casinos every day hoping they will get something for nothing. The sad fact is that deep down they know they don’t get something for nothing, yet they still cling to the fantasy. It is this mindset that has ruined millions of people financially.
Once your money is lost, it is lost. There are no second chances. Lose $50,000 in the market and you are not getting it back. Investing in the stock market is often called the losers game. this is because over 90% of stock market investors lose money in the long run. With these odds, it is shocking that millions of people continue to give their money to these glorified casinos each day.
Why would anyone put a large chunk of their earnings into an investment that is entirely dependent on circumstances that are totally out of ones control. The companies that one invests in may have high revenues one year and go out of business the next. There may be a massive change in technology which sends ripples through all of the economic sectors.
At least you know that when you invest in things such as an education, you know you have a good chance that your investment will stay with you for the rest of your life. When you invest in land, you know there is a good chance that the earth will still be around tomorrow. But when you purchase a company’s stock, you have virtually no guarantees that they will still be productive five years down the road, if that long. As for swing trading or day trading, the commissions will take an even larger bite out of one’s investments than those who pursue long term investing.
So what if Warren Buffet or Peter Lynch makes money hand over fist in the stock market. There will always be a small handful of people in any endeavor in life which they dominate. There are also professional poker players, but the vast majority of those who try to make a living in gambling lose their money and self respect. It is not true that you have to open yourself to greater risk in order to achieve greater wealth. Most of the people who succeed financially in this world have a simple, methodical, and effective strategy to reach their goals. They know their work will pay off because they know they are truly creating something valuable for society. However, the person who throws thousands of dollars at the latest stock tip is only counting on chance to save them.