The stock market: Is it gambling or a path to financial growth and security? Opinions are divided and shaped by personal experiences and stories.

Some view it as a gamble, while others see it as an opportunity for income and retirement savings. But what unites them all? The common thread is financial losses.

Investing all your Capital

Back when I first started purchasing shares, I made this mistake as well. A while before I started investing, I had heard about making your Money work for you and making money in your sleep. Therefore, it would be a good idea to invest all my capital.

Later in life, when I needed Money, it was all tied up in stocks. Indeed, it was a rookie mistake, but a huge one nonetheless. As a result, I sold many of my shares and had to pay taxes, even on losses.

From that day on, I will never ever invest all my capital. This is also one of the most common reasons why investors lose Money. You always need to have some money on hand because unforeseen events occur in life; for example, your car might break down, or your house might be flooded. During times of crisis, you might need more Money on hand, not enough money to pay regular expenses.

Being Emotional

In any aspect of life, emotions cause you to make bad decisions. Especially when making decisions relating to your stock portfolio. Please don’t sell shares just because of a red day. Stocks require time to give you the best potential returns. Time is needed in the market to realize the stock’s actual value and make more buyers want to buy them.

Moreover, being emotionally led makes you easily swayed by bad news about the shares you own. News articles about the stock market are released daily, and most analysts don’t know what they discuss. The main goal of these articles is to generate as many clicks, ad revenue, and platform users as possible. Many of the pieces are only published to make Money.

Furthermore, your friends can also easily affect you if you are emotional. They might say, “What a loser you are buying shares in that company,” or “Those shares will never go up.”

Therefore, the most successful investors use a theory I call noise-canceling headphones. Everyone reading this article has heard of noise-canceling headphones, right. They allow you to filter out the noise. When there are so many people talking about something, whether it is in person, on the news, or on social media, you can’t think clearly. In simpler terms, successful investors like Warren Buffet have a few trusted aids they listen to about the stock market. The rest are insignificant because they base most of their decisions on carefully researched material and the thoughts of their close aids.

Trust me, you don’t want to use emotions when making portfolio decisions. In my personal experience, this has always resulted in me losing Money and having conversations with myself, saying I should have if I just.

The point is to turn on your inner robot and think things through clearly when making decisions. If you are emotional, take some time to get into a better frame of mind.

Following the Crowd

Stay away from the crowd!

Many of them are bandwagon investors. Bandwagon investors jump on every weave they can find. They never think a bull market will crash, and trending stocks such as Gamestop in its heyday are gold for them.

Following the crowd is dangerous because they need to see the good stocks. The good stores are the ones many people need to pay attention to. Diamonds are found in the rough, not in the open.

My advice would be to only listen to a few trusted people for stock advice, take your time researching, and have a select few channels you listen to for stock info. This way, you curate what information you are receiving and make better decisions.

An excellent example to illustrate how important it is not to follow the crowd can be seen in the famous movie The Big Short. It is based upon a true story of when a select few people decided to short the housing market a couple of years before the 2008 recession. Everyone thought they were crazy and happily gave them the positions required to short the market, and then, bam, the housing market crashed.

Following the crowd might feel good because you belong to something. However, it is detrimental in the long term.

Conclusion

After reading this article, you should stop losing Money in the stock market! It may seem like a bold claim, but if you adhere to the advice I have given, it should be straightforward.

Only invest some of your capital, don’t be emotional, and finally, don’t follow the crowd. If you do these three things, losing Money on stocks will be a foreign concept.