“You know Vishal. I have been investing in the stock markets for the past one year. And one thing I have realised is that if you are not an expert, you can’t make money from stocks.
“You have to be ‘in’ the market, and have to be very smart to become a successful investor. What’s your take on this?”
“Are you finished, Ravi?” I asked my friend who had till now given me a long sermon on how he lost a lot of money in stocks in the past 12 months, and why he thought the markets are only for people who are financially very savvy – Ravi calls them ‘smart investors’ – like analysts, fund manager, or brokers.
What Ravi was complaining about was not something new to my ears. I had heard such reasoning earlier as well, especially from people who had lost a bundle in the stock markets.
I’m not sure if you think the same way as well – that you must be an ‘expert’ to make money from stocks.
You see, this myth that you need to be an expert to make money from stocks follows from the first myth we discussed earlier – that investing is risky.
If only you know what the experts were advising investors like you and me at the start of 2008 (when they were all bullish) and at the start of 2009 (when they were all bearish), you will know why ‘being an expert to make money’ is such a big myth.
Of course, you need to be educated and aware about what you are investing into (understanding of the business and awareness about your own behaviour are necessary), but that’s akin to high school education, not PhD!
The irony is that the entire financial services industry has conspired to make you believe that investing is tough and it’s better to leave the game to the experts.
After all, if they do not do so and instead spread the belief that you can make your own profitable investing decisions, how would they earn their billions from selling worthless advice, and commissions every time you trade in stocks?
All you need to make money from stocks
You do not need more than these three resources to become a successful investor yourself:
- Brain: We rarely use it when it comes to investing, but it’s still the most precious of our resources.
- Time: This is precious, but you do not need to spend more than 30-40 minutes of your time each week towards enhancing your investing knowledge, and becoming a smarter investor.
- Willingness: You need to put in some of your own effort for sure – in identifying the right kind of companies to invest in.
Finally, for becoming a smarter and successful investor, you don’t need to spend 5-6 or more hours per week worrying about your stocks or other investments.
Let’s face it. You can’t spend so much time working to make our money work. You have other important things to do in your life – like raising kids, working on our job or business, and living your own personal life.
You also don’t want to be chained to watching the stock market each and every day. That wouldn’t be fun, right?
So the idea is to become fully educated about investing your own way, and then let the wheel roll…without worrying about what the experts are saying, and without spending a lot of time at it.
Remember again, you don’t need to become an ‘expert’ to make money from stock markets.
Just be the person you already are…just use your brain a bit more, do your own homework on stocks you are looking to invest into, and keep your emotions aside.
Believe me, if you are able to do this, you will be better than 99% of all stock market experts out there.