I’ve been investing in the stock market since 2004. Over these 10 years, I have seen two big rallies in stock prices and one shattering crash.
Now, 10 years isn’t a particularly long investment resume, but in these years, owing to my work first as a stock market analyst and then as an educator, I have spent a lot of time researching businesses, studying human behaviour, and meeting thousands of small investors.
Anyways, what I have known through these years is that the stock market can be absolutely brutal to your net worth if you are not wise and prepared.
If you planned to retire in 2008-2009 you were absolutely crushed if most of your investments were in stocks. Most things have rebounded five years later, but that means you lost five years of financial freedom with a whole bunch of worrying while you worked through the recovery.
Now, when you’ve been as involved with the stock market as I have, you see a lot of ugly stuff. Leave aside the occasional financial and economic crises that dot the timeline every few years, you also get to know…
- How stocks and IPOs are (mis)sold;
- How equity research analysts make (read, fake) recommendations;
- How professional money managers (mis)manage investors’ money; and
- How corporate managers mask bad performance through fraudulent accounting.
You see, nothing is exactly what it seems.
In fact, if you, as a small investor, knew everything behind the scenes, I fear pandemonium would break out.
Amidst all this, I have seen a lot of fear and mistrust towards the stock market, especially among small investors, and especially when the stock market is down in the dumps.
Some mistrust believing the stock market is “only made for insiders and rich guys”.
Then there are some who carry the burns due to bad advice from their brokers or financial advisors.
Some fear getting into the stock market because all they have heard about this place is scary stuff.
And then, there are many who remain out of the stock market just because they don’t know or understand what happens inside.
Now it goes without saying that stock market has been one of the best mediums to grow wealth gradually over the long term, and for a lot of investors.
People who understand the power of compounding, the benefits of owning good businesses, and have the capacity to be extremely patient with them, have created great riches from stocks.
But I am sure, when they started, even they must have been surrounded by a sense of fear – a sense of the unknown.
So, I ask you today, as you may be starting out in stock market investing, or you may have been investing for a few years like me –
What is your biggest fear of being a stock market investor?
Basically, before or when you put your money in stocks, what worries you the most?
Image Source: Open Mind
Manage Fear, or Get Managed By It
You see, we’re all scared…of some things…and many things.
I’ve never seen an investor, or any person who has no fear.
But as I look back to my life and to the lives of so many others, I have realized one very important thing. It is that, in our life, the issue is not really ‘fear’ but rather, what we do despite it.
We can either get managed by fear, or manage it. We can either acknowledge fear or fall into an emotional whirlpool. We can either accept fear or pretend that it doesn’t exist at all. We can either give up or get up in the face of fear.
Of course, your response to fear will be different than mine, but what will be common between the two of us is fear itself.
So let this tribe know about your biggest fear of being a stock market investor. Share in the comments section below.
Maybe I have an antidote to your fear. Maybe someone else from the tribe has. So, please get going!
Value Investing Workshop in Bangalore: My next Value Investing Workshop is in Bangalore on 1st November 2014, Saturday. If you are in the city on that date and are willing to attend the Workshop, please click here to register now.