Stock Investing Is Not For The Timid

This last week we have witnessed a lot of ups and downs in the stock market and this is now the fourth day in a row it’s going down. It shows that that you must have a strong backbone to be able to tolerate the wild swings you will get when you put your cash in stocks.

A lot of people are fascinated and think it is the stock market for dummies it is so easy: buy a stock, hold on to it for awhile and cash out later with a gain.  However, there is a lot more to it than that and certainly more complicated than just placing your money in a certificate of deposit that is risk free at the bank. There is nothing at all about stocks that are safe and with the 1000 point drop midway through the trading day on 5/6/2010, that must be quite clear.

In return for the risk you’re taking with stock investing, you’ve got the opportunity to get a much larger return than you do with Treasury bills or CD’s. However many stock traders that are just starting out are probably not prepared for the every day fluctuations they’ll see after they start buying and selling stocks.

Having the ability to accept down days along with the up days is a much needed trait that it takes time to aquire. It is a lot more than just learning how to buy stocks for beginners. Many novice traders find they only just don’t have the nerves for the daily stock price fluctuations they will have to deal with. The market volatility and watching your stocks go up and down by the hour is one thing that not everybody can deal with.

To some, investing in stocks feels similar to gambling. Once you own a portfolio of shares, your money is always in play. Determining when to buy and when to sell at any point in time is definitely a realized talent that’s difficult to acquire. Having the ability to deal with prolonged bear markets is something that many people find, after the fact, is too hard for them to do.

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