Addressing some commonly held misconceptions on this sub

Addressing some commonly held misconceptions on this sub

1. Investing in stocks is a zero sum game :

No its not. Zero sum game implies there is no net value creation. If you have followed indices over decades, you can see there is always net value creation. Trading, on the other hand, specifically F/O is a zero sum game. Investing in stocks is zero sum when benchmarked against a broad-based index fund, but that’s not such a bad thing. (it means very people beat the markets while most dont).

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2. Buy high, sell higher :

Momentum based strategies might work, but the more people adopt it, the less likely they are to work. For most people, it will make more sense to buy good stocks when price is low (both with respect to earnings and 52-week high). In other words; ‘Buy low, sell high’

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3. You need to be intelligent to do well with stocks :

Most intelligent people i know have consistently lost money in the markets. Why? Because making money by investing in stocks is more about controlling your own behavior than being intelligent/having the ability to predict trends. You dont need to be particularly intelligent to make a lot of money by investing in stocks.

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4. You can learn from the experts :

Most people who portray themselves as experts are out to make money. Investing in stocks is actually very simple. Those who make it seem complicated are doing so to make money out of selling their courses, etc.


View on r/IndianStockMarket by Legendarywristcel


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