Welcome, today I am going to go over what makes investing so hard and why so many people struggle to create generational wealth through the stock market. The process is actually really simple and it is not complicated to make money in the stock market.
So, Why do people lose money?
People lose money in the stock market for 2 main reasons:
1. They are not patient 2. They do not have emotional stability
Emotional stability is simple, you need to not care if the stock goes down by 10% or up by 10%. Either of these 2 should effect you when it comes to creating wealth in the stock market. You should buy a stock and not care about the price for a minimum of 10 years. If you do this, you put yourself in a position to out perform the market. Most people sell to early or panic when the stock goes down, you need to be able to stay calm and be able to be brutally honest with yourself in regards to what the asset can produce over the long term. If you can do this, you can create massive wealth in the stock market. Focusing your efforts on handling all negative emotions is the key. You have to be able to handle your emotions as they come, you can't let external sources influence your investment decsisions. A few examples: news and friends. They will want to tell you the right thing in regards to what you should do when investing but it is not always the case. These external sources can sway you from the independant thinking# required in order to create wealth in the stock market. You have to be focused on what you are doing, you can't let external factors sway you.
Patience, this can be applied in multiple ways in the stock market. A few examples are as follows:
1. Patience in holding the investment 2. Patience in finding the investment 3. Patience in expecting returns
Patience is the key to all successful investing and making money, you need to be able to have a long term mindset because money usually flows to the people who think long term and don't chase money. Instead they build something which attracts wealth at scale. You can do this through stocks, if you are focused on buying something of massive long term value in the market place.
A few examples: Coca Cola.
Coca cola is a great stock, since the company is able to generate profits over the long term and consistently perform well in its earnings and this is the key to creating wealth in the stock market.
Investing is made hard by the mindset of the investor, so to succeed in the stock market: you need to be able to have a certain character or mental trait which allows you to do things which are contrarian. Since the top investors are typically those who do things which are not obvious to most.
This means, you have to be able to focus your efforts on finding something which will create value for others over the long term. Such as a company, like Apple. This business is delivering value massively and consistently to the market place and this will continue to drive up the price of the stock and if you are patient with the process. You make big money and this is why investing is simple and not easy. Because most people have unrealistic expectations in regards to what the stock can do.
If you want to make investing simpler, a few key points:
1. Focus on value creating businesses. 2. Focus on the long term. 3. Do not pay to much to attention to volatility. 4. Use your intellect to find great businesses. 5. Do not emotionally invest in stocks. 6. Commit to a few good businesses and you'll get rich if you are patient. 7. Never sell to early. 8. Allow your investments to grow long term (min 10 years) 9. Do what most people do not do. 10. Be focused on finding gems.
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