Why common man loose money in stock market?
One of the things what we have noticed when any common man buys stocks is that he gets attached with that stock. Now that attachment can exist because the company has a wonderful product or probably it has great management. Some of the people go one step further where they feel proud and boast about owning stocks of particular company.
But people failed to understand that companies/organizations are created for profit making. Over a period of time company can have fundamental changes,your favorite management can resign from the organization,the product which you love can become outdated and things can change dramatically.
Once I met a person who loved Kingfisher Airlines a lot.He was never tired of talking about the service of kingfisher airlines, the leadership and dynamism of Mr. Vijay mallya and how much stocks he owned of kingfisher Airlines. But later when the stock started moving down due to financial crisis he was still not convinced that things were wrong. Later when the stock came down 10% low he was still confident that management will do well.
Stock then came more 10% down. His confidence changed into hope. He had high hopes that company will have some kind of revival plan to bounce back. Further the stock stumbled more 20% changing the hope into suspicion and anger.Finally now the stock is trending all time low and he is completely helpless.
This has been one of the common reasons why people fail in stock market. They wait for the bad to turn worst and worst to change in to a nightmare which is irrecoverable.
If our dear friend would have put a stop loss till now he must gave retained 80% of the capital and probably invested in something better.
One of the things what we have noticed when any common man buys stocks is that he gets attached with that stock. Now that attachment can exist because the company has a wonderful product or probably it has great management. Some of the people go one step further where they feel proud and boast about owning stocks of particular company.
But people failed to understand that companies/organizations are created for profit making. Over a period of time company can have fundamental changes,your favorite management can resign from the organization,the product which you love can become outdated and things can change dramatically.
Once I met a person who loved Kingfisher Airlines a lot.He was never tired of talking about the service of kingfisher airlines, the leadership and dynamism of Mr. Vijay mallya and how much stocks he owned of kingfisher Airlines. But later when the stock started moving down due to financial crisis he was still not convinced that things were wrong. Later when the stock came down 10% low he was still confident that management will do well.
Stock then came more 10% down. His confidence changed into hope. He had high hopes that company will have some kind of revival plan to bounce back. Further the stock stumbled more 20% changing the hope into suspicion and anger.Finally now the stock is trending all time low and he is completely helpless.
If our dear friend would have put a stop loss till now he must gave retained 80% of the capital and probably invested in something better.
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