- Engaging in unhealthy eating habits despite knowing the consequences.
- Driving under the influence of drugs or alcohol despite being aware of the dangers.
- Not saving for retirement despite knowing its importance.
As a beginner in the stock market, you will typically start with limited knowledge and high return expectations. The journey of a beginner to becoming a pro often involves the following stages:
- First you will experience Beginners Luck: Yes, you will experience a form of "beginner's luck" in the stock market, similar to that in gambling. You will start investing at the top of the bull market. You will surely make money with your initial purchases as bull market is still feasting on last suckers. This lucky, profitable investment will lead you to believe that you have a natural talent for investing. However, this luck will be short-lived as success in the stock market requires a deeper understanding of the underlying factors that drive stock prices. But you give a damn.
- Then you will get excited and eventually reckless: With initial success, you have tasted blood. Spend time researching stocks, reading articles and watching videos to gain a basic understanding of how the stock market works - these activities are all thrown out of your window. Driven by overconfidence, a lack of understanding of the risks involved, and a false sense of expertise, next thing you will do is to set unrealistic goals (like doubling money every year - i am being modest here). To realize this un-realizable goal, you will shift towards F&O trading. You simply don't know what L stands for in the word Leverage ;-).
Then you will get confused, disappointed and frustrated: Instant karma strikes back. In no time you will loose an amount which will be substantially above your risk appetite. You get confused. You now start going back and forth from delivery to FnO to recoup losses. But nothing will work. The emotional impact of losing money will result in feelings of disappointment, frustration, and anxiety. The whole market will appear rigged. You will start questioning your ability to succeed in the stock market and even consider giving up. But stock market is addictive. You couldn't give up and remain reckless for some more time. Pardon me. I don't know why I am typing this. Surely not to mock you. चौबे गए छब्बे बनने, दूबे बनकर आए. I can see you have started hating me now, but that's ok. Let's move ahead.
And finally after enduring so much pain you will awaken: Sanity will prevail at end. You will reflect on why it happened. You will finally start appreciating the fact that success in the stock market requires more than just a basic understanding. You will start to seek out more comprehensive education, either through self learning, books, or mentorship, to gain a deeper understanding of market and other important Behavioral Aspects of investing. These are the things you will learn from the roller coaster journey (of course after losing a lot of money):
Volatility is normal: The stock market is inherently volatile and can experience sudden, sharp swings in both directions. So be prepared for it.
FnO is not for beginners: I repeat - FnO is not for beginners.
Diversification is key: Diversifying your portfolio across different types of investments can help to reduce your overall risk.
Timing the market is difficult: It's almost impossible to consistently buy low and sell high, so don't try to time the market. Instead, focus on investing for the long term and stick to your investment strategy, even during periods of market volatility.
Do your research: Before investing in any stock, be sure to do your research and understand the company and its financials. This will help you make informed investment decisions and minimize your risk.
Be prepared for losses: No investment is completely risk-free, and you may experience losses along the way. It's important to be prepared for these losses and to have a plan in place for managing them.
As a beginner in the stock market, your journey is going to be challenging and full of ups and downs.
Reduced risk of market fluctuations: By investing for the long term, a beginner can mitigate the risk of short-term market fluctuations and volatility (your level of suffering rhymes with this fluctuation). Over time, the stock market has a historical trend of growth, and investing for a long period allows beginners to ride out any temporary market downturns.
Compound growth: Another advantage of long-term investing is the power of compounding, which is the ability of an investment to generate earnings, which are then reinvested to generate their own earnings. This creates a snowball effect that can result in significant growth over time, particularly for beginners who have a longer investment horizon.
I am here to help and be your guide,
In the stock market, I'll help you stride.
With my advice, you'll surely thrive,
And from losses, you'll surely survive.
Be realistic with your returns, you'll see,
No leverage, it's the key.
Think long term, don't be in a rush,
A solid portfolio, that's a must.
So hold on tight and follow my lead,
The stock market, you'll surely succeed.
A successful journey, is what you'll find,
With me by your side, and of course peace of mind.