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The Truth About Stock Market

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  • Tip Bones

Many people wants to build wealth in stocks. Most of these people are trying to time the market, some of them even do day trading. 

Analyzing which stocks to buy can give you a massive headache and it can even crush your soul when you picked the wrong stocks. I think that's why other people turn to day trading so that they can get quick money by beating the market.

 

Here is the truth: Majority of the people can't beat the market consistently. There are only few people like Warren Buffet who can do that and that is why he is very famous, but others will argue that it is also associated with a great amount of luck. 

Most people are trying to become the next Warren Buffet, but the thing is Warren didn't even time the market and he can't also predict it everytime. He admitted that he made a wrong choice by not investing in Amazon and there are also times when he is down more than a billion during a market crash. 

What makes Warren Buffet unique is that he didn't sell off even in a massive downtrend. He understands the market.

 

The market is very cyclical there are times that it will go down, but it will go up again.

 

By investing in Index funds, you don't have to worry about analyzing and picking a stock, like I said most of us can't beat the market consistently. I'm not saying that you cannot build wealth in picking stocks though, it is just more convenient if you will just invest in low cost index funds since it outperforms stock pickers most of the time.

 

Jack Boggle is the founder of Vanguard index funds and he had worked 61 years in the stock market but even him gets wrong. Most of the fund managers will also gets wrong at some point. 

Even Warren Buffet himself acknowledged the power of the low cost index funds and recommends it.

 

This is not a financial advice, but this is based on many research. I suggest to read more about how the stock market works. Read books like "The Simple Path to Wealth" by JL Collins. 

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