The 7 Hard Truths About Stock Investing

It is crucial for investors to start with the right expectations when it comes to stock investing. Rome wasn’t built in a day. It takes time and effort to be consistently successful in stock investing. Many beginners they move into investing and expect quick results in a short term of time only to realize that stock investing isn’t as easy as they initially thought. Even some experienced investors that have been in the market for a long time may feel flustered after many years of fruitless returns.

When I started out my investing journey, I searched for books to gain some knowledge on investing and i was looking for more ways to increase my passive income. Some investing related books that I highly recommend for every investors  to read are : Peter Lynch’s One Up On Wall Street and Learn to Earn, Benjamin Graham's The Intelligent Investor, and Secrets of Millionaire Investors by Adam Khoo. Reading investing books can greatly help investors to be prepared for the real battlefield which is the Stock Market. Nothing beats real life experience - the place where you have a rollercoaster ride when it comes to your emotions and can truly test your trading psychology. 

There is one common hiccup that always hinder both new investors and even experienced investors that have yet to be profitable after many years. That is the Fear of Losing. It usually doesn’t manifest itself early for new investors (they may start out a long winning streaks) until they really lose money for the first time. Even seasoned investors who have lost money in the stock market still fear losing money from their next trade and worry about making another bad decision. Losing is still part of the game and it is evitable. It is how we handle the loss that matters.

It is important for all investors to have the right understanding when it comes to Stock Investing. This will help to build a solid foundation in their investing journey and to accept that they don’t have to win all the time to be a successful investor.

 Here I will lay out the 7 Hard Truths about Stock Investing:

1. You Can't Win All The Time

Please expect to lose at times even with trades that you were so confident of winning. No single investor can win all the time (if they claim they can, beware of these people). Even someone like Warren Buffet has lost money and bought losers during his long investing career. Most importantly, the investor has to know how handle losses and do not gamble everything away (this is where Portfolio Sizing matters).

No matter how long you have been investing, you should always take the loss as something to learn from and try to improve from there.

2. You Can't Escape From Emotion

We are after all humans and we have emotions. We are not Robots so we can't just simply put aside emotions when it comes to investing and trading.

What we can do is to take note of our emotion, how we feel and try to stay rational. Keep a trading journal and write down your emotion for each trade. Read your journal in a few days or week time and try to understand yourself better. 

3. You Can't Predict The Future

I have seen many Youtube videos and  news articles that talk about market crashes (even with date and time predictions!) for the past few years. It has yet to happen and I may sure someone will predict one crash correctly after so many incorrect predictions. Back in 2014, I listented to one Fund Manager who kept saying that the US market will crash and to quickly sell all my assets. Naively so i believed him and I sold most of my US stocks back in 2014. I actually missed out the biggest return in the US stock market bull run from 2014-2020. 

So lesson learned....do not try to predict the market. If the stock's price is right and the company is good, just invest in it.

4. Believe in Yourself

We will always get hot tips from stock market gurus, and most investors will blindly follow with the fear of missing out. They believe that these gurus or experts are always right. 

Believe in yourself. Always do your own homework when it comes to investing, No matter how attractive these gurus or experts may sound. End of the day,  you should take care of your own money.

Remember to only trust yourself and always DYODD (Do-Your-Own-Due-Diligence) when it comes to picking stocks.

5. You Can Lose A lot of Money in The Stock Market

It is possible to lose your entire investment in the Stock Market. Avoid playing margins unless you have the money to cover the losses incase your investment goes south. Losing your entire investment is not unthinkable. If the company you have invested has a huge collapse due to a catastrophic event, you could lose a lot of money here. Think of WorldCom and Enron. 

Nothing is impossible so it is better to spread out your risks among different stocks in different sectors.

6. The Market Can Be Quite Volatile

The market does not move in a single direction. It usually moves in a zigzag pattern, which can be uptrend, downtrend or side ways movement. Price of stocks can easily move up or down and go against the direction that you expect it to when the stock market is highly volatile. Always expect the unexpected and be prepared for any negative results along the way.

Investors must learn how to handle these type of swings in the stock market and learn to take action when the opportunity arises. 

7. You Need Patience to Survive Long

Being patience is a virtue. This is more so in the world of investing. Buying a stock can be akin to fishing. In order to fish the right stock with the right time to buy, you need to be patient. So take your time, identify your purpose, style of investing and locate the right stock. After that, use the ultimate virtue of patience and you will be rewarded.

In the word of the Oracle of Omaha, Warren Buffett: “The stock market is designed to transfer money from the active to the patient."