The stock market, a business that deals with the buying and selling of businesses.I consider each stock as a business, a business of that particular company.
So, before buying a stock you must thoroughly go through the details of that company.You should know what product they make, how the management works, what is the revenue they generate in each quarter and stuff like that because when you buy a stock, you actually buy a part ownership of that company.
So, being an owner you must know the bits and pieces of your company.
I know you must be thinking that is it enough to earn the profit in the stock market by just knowing everything about a company.
Well, the answer is NO.
You just cannot predict a stock price by knowing everything about a company, knowing about a company and regularly following the news is only the Fundamental side of the market analysis, there is also another side of it that is the Technical analysis of the market.
During my initial days of investing, I always found people saying me that don’t put your money in stock market, it’s gambling. I know few of you who are reading this article also have the same thought flowing through your brain cells but trust me it’s not at all gambling.
Yes, of course, stock market investment is associated with a high level of risk as the nature of the market is volatile but buying and selling of shares is completely different from a roll of a die or fall of a card, which is gambling.
Gambling is nothing but a random act of chance and investment, on the other hand, is putting your money in something with a well-prophesied return.
When you buy a stock you just don’t buy it by seeing the prices randomly but you also look deeply into the graph that the company is having in the previous years, the product that the company is making, the news related to that company and so on and so forth.
But I must say this very clearly that if you are not researching at least a bit before buying a stock then you are gambling with your hard earned money.
Yes, the stock market has a high risk associated with it and at the same time it also has a high return on investment but it can never be compared with gambling if you are doing a good research and buying a stock.
To know the details of stock market click on Stock Market.
Sports gambling is one of the most common forms of gambling. So, let’s take the example of a football match, to be specific let’s take a match between Manchester United and Barcelona.You have put your bets on Manchester United and let’s say the amount is Rs 200/-(Rs Indian Currency).
During the match, you see that Barcelona has given 2 goals and your money has taken a downside ride and you can do nothing about your loss. In the same scenario, if you had invested your Rs 200/- in some company’s stock you could have minimized your loss by Stop Loss.
This is is the key difference between gambling and investing.
The stock market investors can control their losses by putting stop loss to their stocks.If your stock drops 20% of your purchase price you always have the chance to sell it to someone else and still get 80% of your purchase price. This is not possible in gambling, in gambling you have to loose all your money if your team loses.
Another very important aspect is time.In gambling, the time you see your money having a roller coaster ride is less as the decision of profit or loss comes with the completion of the match.
On the other hand in stock market investment, you get a lot of time to recover your losses if any and always have the chance to wait for the stock prices to go up and then sell.
Either you are a gambler or an investor, the only factor which remains constant for both is the risk.You must always have the capability to take the risk and not let the situation govern you but vice versa if you want to become a successful investor.
The difference between gambling and investment clearly concludes that investing in stock market is a game of understanding the market and predicting the human sentiments in advance with the help of news, track records and your personal concepts, which in any odd case can never be compared with gambling until and unless you are investing blindly.What I always suggest to young investors is first to study the market and then step into it to become someone like Warren Buffet or else become a gambler and see what magic the mathematical concept probability does for you.
So what do you want to become???????????????
An Investor or a Gambler???