why do they pull out out of stock market when they know the stocks' prices may rise again?
correct me anywhere in the question if i am wrong,but,as of whatever i know to my knowledge,why do people give up on stocks trading when they know the stock prices will rise again and their money will be recovered ?
i’ve heard from many people,especially fathers of my friends that they pulled out out completely and for ever,not to go back again.
please also throw some light on the clear meaning of bear and bull market and how can we can profit from bull market,and the stuff about fraud profits
i’m a 18yr old boy,hopeful to enter the stock market jungle when 19,or possiblt at the earliest
now experiences of old guys whom i ask for their advices on stock exchange etc,tell me not to go for it,"its a big gamble" and that discourages me….but i know stock markets can make one richer with careful investing…so all i need to know is whether the money lost when the market crashes is really lost,or if it can be gained again though slowly over months or years when it rises again
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November 13th, 2010 at 5:03 pm
We’ll I would say you are more on-track to understand the market than the people you have been talking to.
1. The stock market "its a big gamble." I think driving on the highway is a big gamble. Eating certain foods is a big gamble. Smoking is a big gamble. etc.
People who don’t understand the market or who have lost money consistently (usually the same people) are not the people you want to listen to.
A lot of people from the Depression era are extremely conservative. Many who were in the market at that time, lost everything. There was a 25% unemployment rate and a 50% foreclosure rate on homes back then.
The stock market is a business, a big mega trillion dollar global business and is necessary for capital formation, extension of credit, and risk management.
The market is not guaranteed nor is it wise to put money in and just forget about it. If one is not fairly knowledgeable and can devote the time to study it on an on-going or periodic basis, this is where professional advisors come in. They key is finding one who understands the depth of the markets; a person who has actual trading experience, pref 15+ years.
Over the past 2 years a lot of people lost 40-60%+ of their money is the market IF they sold when it was down, or owed stocks in companies that were subject to tremendous risk such as the financials (banks, brokers, insurance co’s, mortgage cos, etc).
See 2007 prob company lists:
http://answers.yahoo.com/question/index;_ylt=AuKU6Z3PRb7ir4tqjdWOIpXty6IX;_ylv=3?qid=20071031144709AAq5Ql2&show=7#profile-info-6049a2cb7ab1f9bdad88eec566e8c30faa
http://answers.yahoo.com/question/index;_ylt=ArcdwJtUtdtpAq7NtZWYROjty6IX;_ylv=3?qid=20071120072724AABavPd&show=7#profile-info-vQp08k6kaa
The majority of the US’s wealth is from stock and real estate. No one got rich working as a fry cook unless his name is Ray Kroc (McDonald’s founder) or Harland "Colonel" Sanders.
Ray Kroc
http://www.time.com/time/time100/builder/profile/kroc.html
Harland "Colonel" Sanders
http://en.wikipedia.org/wiki/Harland_Sanders
There are also a lot of people who lost their home over the last 2 years+ or have lost 20-70%+ of their equity in their home. You don’t see everyone whose equity is down suddenly moving out and living in a tent. As long as they can still pay that mortgage, they just will be in that house a very long time, hence the 30 year mortgage.
Here are some links to read more about the markers and to further address how to get in the business if you want to learn more:
"How can i learn stock market…"
http://answers.yahoo.com/question/index;_ylt=Ahrmy3ymMY_HcNJqq7uj6mzty6IX;_ylv=3?qid=20080409111324AANFxjZ&show=7#profile-info-gViCvjQeaa
"Learning about investing in the stock market?"
http://answers.yahoo.com/question/index?qid=20090519131927AA6KmDw&r=w#BaN_M2D0AnhGUqjJm65y
"What does it mean when people refer to the Stock Market as a Bull, or a Bear Market?"
http://answers.yahoo.com/question/index;_ylt=AhYpam3eDGm8Rfd6uniX7pPty6IX;_ylv=3?qid=20090331082353AAB9qYR&show=7#profile-info-WLijeQB6aa
"How can i start stock trading and investing?"
http://answers.yahoo.com/question/index?qid=20090526090232AAXxi92&r=w#BaN_M2D0AnhGUqjJm65y
Understanding short selling FAQ:
http://answers.yahoo.com/question/index?qid=20090424050917AApWiOJ&r=w#BaN_M2D0AnhGUqjJm65y
"What degree do you need to become a Stock Broker?"
Additional links to info:
http://answers.yahoo.com/question/index?qid=20090517195043AA7IAtY&r=w#BaN_M2D0AnhGUqjJm65y
<06-10-2009>
http://answers.yahoo.com/question/index?qid=20090610001029AAyr6jU&r=w#BaN_M2D0AnhGUqjJm65y
November 13th, 2010 at 5:03 pm
ya it’s stupid .. in 1929 the people who got rich many years later were the ones who did not touch it. the people who sold for pennies on the dollar lost everything
the thing that makes me mad, is mags like "smart money" often give out bad advice like that, and then later the stocks recover … smart money has put out alot of bad advice over the years
EDIT: why wait? you can jump in right now at ING Direct, for 4 bux a trade, and you can just grab like 20 bux worth at a time of whatever you want … my advice would be to "diversify all together", and even within the stock market … so tie up most of your stock investments in solid blue chips (cheap right now), and maybe around 20% in gambles … for example, i think i paid around $6 dollars a share afew months ago for a bunch of GE , and now it’s already back up to $14
the blue chips are usually slower but more stable, and better for long term investing than even T-Bills (they have always out performed T-Bills), and markets have always recovered
when your dirt cheap blue chips you grap now go back up to mid 1990’s rates … you and all the other smart people will be filthy rich (but tell Obama to leave the capital gains tax alone)
November 13th, 2010 at 5:03 pm
It is not that people do not think that stocks are going to rise, its that they feel they can make more profit in another area. Stocks are just one type of asset, there is also real estate, bonds, derivatives (options, futures, options on futures), and a few others. But most people feel (at this point in time) that the stock market has had a real good run since it bottomed. I believe some financial stocks are up about 50% in about 3 months. Therefore, most traders will be looking in other places for increases like that.
You can not expect to go in to something like the stock market and just make money. It doesn’t work like that. You have to do research on what to buy and when to buy it, then you have to do homework to determine if your stocks are still worth being in. There is no shame in loosing, just so long as you win more times than you lose.
As far as bull and bear markets; the easiest explanation is that when you are in a downward trend (bad) market then it is traditionally called a bear market. Likewise, an upward trend (good) market is traditionally called a bull market. There are percentage points that actually define this but I can’t recall off the top of my head what they are.Frauds are not that wide spread as long as you stick to blue chips (large firms) and stocks that are priced over $3-$5.
It is a gamble, but no more so than driving your car down the highway at 80 mph. Sure something bad might happen but from experience you know you are going to get to your destination. Stocks are similar, sure they have fall-outs but over the long term they tend to move higher in price. You just need to know your tolerance level for risk and know that your profits or losses will be a direct result of how much risk you take. Certain stocks are extremely risky but offer high returns.
November 13th, 2010 at 5:03 pm
1) fear is the worst enemy of a stock trader. Yet, its abundant in humans. The market goes down because people are pulling out. People are pulling out because the market is going down. Its a double edge sword. A lot of people just want to put what they have left in a safer investment.
2) Over the two years previous to the crash, prices were going up, well over the actual value of the stocks. Those who invested at that time aren’t likely to recover their investments fully. Many stable companies have declared bankruptcy. To put it lightly, a lot of people wont recover the money lost, at least not anytime soon.
3) Your a smart investor to get money in now, while its still low. Learn from their mistakes and make trades based on knowledge and information, and not for emotional reasons.
November 13th, 2010 at 5:03 pm
A young personlike yourself should probably start investing in the stock market, using reputable mutual funds. You should consider setting up an IRA with a company such as Fidelity or Vanguard. You should get some reading material about investing, take a class or talk to someone who knows a lot before you start investing. Do it gradually, putting in a small amount each month. At your age you have plenty of time to recover if the market goes down. In fact you can buy more when the market is down. The older people you mentioned may be close to retirement. At their age, they should not have as much in the market, because there may not be enough years before they retire to recover losses.
November 13th, 2010 at 5:03 pm
When someone gets scared of something investment-wise, they sell, regardless of whether or not, the stock will come back higher at some point. If, for example, you feel Apple Computer will falter due to Research in Motion’s new products, you may sell Apple.
Also, there are many traders out there, as opposed to investors, that flip stocks daily, causing erratic price swings. In yesterday’s world, people bought a stock and held it forever or until retirement. Today you may buy it now, and sell tomorrow.
A bull market is when everyone feels life is grand, and all are buying into the markets. And a bear market we saw this past year when the floor fell out due to the banking crisis.
There is no such thing as careful investing, as one never knows. Who knew Citibank stock would ever trade under a dollar, or Bank of America under $4.00? Who knew AIG, the once largest insurer would nearly fold?
It takes a lot of luck as well as research, skill, timing, and the right stocks at the right moment to get rich, as well as knowing the most important of all………. when to sell.
November 13th, 2010 at 5:03 pm
If you take a look at prices at end of 2008, you can see that many very careful investors who have held stocks for 30+ years, maybe 40+ had seen zero net profit over that period. Now this is not the first time that these old investors have seen their nest egg lose value. Some of them stayed in before, and saw their nest egg rise to wondrous heights.
They are not so young now. Now, waiting another 40 years to regain their investment no longer looks possible. Now they seriously doubt that there is integrity and wisdom in the companies listed on the board. Their advisers were still advising them to buy, right into the crash. So, if there is another crash coming, they expect no better from advisers.
When we think of investing, we know that trading on the big board is a zero sum game over any prolonged period. All that is ever gained is the dividend, and that is often cancelled out when companies make big mistakes, fail, and lie through their teeth to the bitter end.
Yes, some people get richer on the stock market, and some get poorer. Some after a lifetime will have about what they put in. If you are a teenager you can trust that you will devise a strategy that will make you a winner. As an investor I was always delighted to discover someone with a well trusted strategy. They were always the person who would make predictable mistakes.
Basically, if we could trust corporate management completely, over the long term trading in the market has a potential for a gain based on earnings of companies, and anything more is someone else’s loss. Trading is a zero sum game.
We know that in the casino, there may be someone with a finger on the roulette wheel, slightly loaded dice, a deck of cards that has one or two cards removed that you would not anticipate. But when it comes to investing, there are always people with insider information, management that is giving truthful but deceptive information to the investment media.
So, for people tired of being made suckers, the stock market starts to look like a can’t win proposition, just too many ways one will be rooked.
November 13th, 2010 at 5:03 pm
The best term to fit this is….Once bitten, twice shy. Stock prices might rise again but some stocks may never come back to it’s previous glory.
At one point this year my portfolio was down 70% from my high. I got greedy when my heart told me to pull out. I couldn’t even look at my stock portfolio for couple of months there. One of my stocks was down 95% at one point…lol. If you are young then you might recover. If you are an old fart looking at retirement, you probably have a substantial amount of money in the market …saving it up for years…it tends to hurt more. A lot of old people pulled out at the bottom and a lot of thoses stocks have double since March. So they lost both ways. I have one that quadrupled.
I kept my money in and even put more money in the market in March. I have recover all my money back over the last three months. basically from two stocks that are up big because three of my stocks are still down 30-50%.
the stock market is like modern day gambling. Sometimes you require more luck then skill. It’s manipulated by a few…if you learn to play the game…you might make money but you can also lose big if you play it wrong.
If I were older I might be scared to get back into the market too.
I’m not nieve enough to think the market will keep going straight up from here. There are still some things fundamentally wrong with the economy.
As for the advice on paying $4 in fees to buy $20 of stock…don’t do it…lol….you would have already lost 20% at the start.