The popular belief that successful stock market investors are those who made a lot of money buying and selling shares irrespective of the length of the holding period or the quality of the stock they bought. This is possible in the stock market because of its dynamic pricing mechanism and excellent liquidity, participants would immediately know whether they have made the right “BET” or not.
Personally, I believe that investing in the stock market should not be treated like a competitive sport, where the person who generates the most amount of money in the shortest possible time is hailed as a modern day hero of sorts.
Sure, there would be a handful of people who can demonstrate that their market timing abilities works, but these would be exceptions rather than the rule.
I remembered an analogy given by a finance professor so many years ago,
“ten years ago there were 1,000 traders who started investing money in the stock market, as the odds of being right or wrong is 50/50 (you either buy or sell) every year; after a year only half (500) would be proven right,
Extend this to ten years and on the tenth year only 2 would be left standing,
is this because of stock picking skills? Or just because of pure luck?
All of these perceptions, in my mind create undue pressure on newbie investors making them believe at the onset that the stock market is just like a casino where the objective is to amass as many wins as possible. Unfortunately, the Law of Probability catches up with them sooner or later, eliminating one more long-term investor.
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