How Most People Lose Money in the Stock Market?

It's quite common to hear people talking about how much money they lost in the stock market. But have you ever think how majority lose their money? The answer is they just lack of financial intelligence! We have to know that when we buy a stock, we are actually buying a share, an ownership of an ongoing business. Instead, most people treat stocks like lottery tickets, buying and and selling based on predictions of whether the price will go up or down in the short term. They treat stock exchange like a casino. Without financial intelligence, how do these people make decision on buying and selling stocks? The answer is based on greed and fear.

Scenarios when people buying a stock out of greed:

• Everyone is buying the stock
• They receive a hot tip from a friend
• The stock is rated 'strong buy' by stockbrokers
• They see the stock price rising and other people making money.
• During economic booms or bull market where majority of stock prices are shooting up

Consequences when people buying a stock out of greed:

• Buying stock at a price that beyond its true intrinsic value
• Experience the stock price dropping the moment they buy it

Scenarios when people selling a stock out of fear:

• Everyone is selling the stock
• The stock is rated strong sell by stockbrokers
• They see the stock failing which triggers a fear of more loses
• During war or recession when pay is cut and jobs are lost

Consequences when people buying a stock on previous scenarios:

• Selling stock at a price that below its true intrinsic value
• Experience the stock price shooting up the moment they sell it