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Not The Right Way to Invest in the Stock Market

Everyone has their way to invest in the stock market. However there exists one of the worst ways of investing in the stock market. The worst way to invest in the stock market is not to have a plan and be rewarded. Last night I was invited along with my wife to an evening cruise in the Mediterranean Sea. A couple of years ago we met them in Croatia and sailed on their boat. Upon arriving to the pier I thought we were in the wrong place. The boat was not a boat, rather a yacht. I was somewhat in shock. After speaking for a short while the owner of the “Yacht” told me he made all the money to purchase the boat, by buying Citi stock and putting a vast part of his net worth into the shares. Being a stock investor for years I asked him what his plan was. He told me he had no plan. He just felt that Citi would not go out of business and would be a good investment. My simple question what was the difference with Lehman Brothers? He did not have an answer. We all know that Lehman Brothers imploded.

The bottom line was he was negatively rewarded “currently” for not trading with a plan and making a big gamble. He even admitted it was a big gamble. Investing in the stock market in this manner will only set someone up for a bigger failure. When they invest in the stock market, they feel invincible. They feel they know better. However investing in the stock market with a plan is like driving a sports car 110 mph without a seat belt. The stock market has bumps and one bump can throw that sports car for a tailspin.

If you want to the right way to invest in the stock market. Have a plan, take small bets, know when to exit with both a profit or a loss.

Investing in the stock market is fraught with risks.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

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