Myths about investing in the stock market

One of the main problems that prevent the growth of the depth of the Mexican stock market is the lack of knowledge.

One of the main problems that prevent the growth of the depth of the Mexican stock market is the lack of knowledge. Compared to other countries, the value represented by the total market capitalization in Mexico is barely 36% of the Gross Domestic Product. This lack of knowledge sometimes brings with it the generation of myths…

This lack of knowledge sometimes brings with it the generation of myths about investing in the stock market. Some of these will be disproved in this article.

Who wins when investing in the stock market?

Throughout this entire series of articles, the same premise has been used: making money in the stock market is no longer just a matter of millionaires. However, who really gains from all the movement in the stock market? The answer is actually not quite simple, but you can start by saying that all. From the great aggregate, when there is a solid financial market in any country, the movements that occur in it are part of the expectations of the economy.

This means that, from abroad, a financial market is attractive for investment when positive trends are shown for the long term, without mentioning, of course, domestic investment. In this way, when the financial market is capable of providing financing, companies will be able to fund themselves through the issuance of instruments.

When this type of instrument is focused on improvements in production, capital investment (such as an increase in production plants or industrial buildings), or some other form of expansion, it is possible that a certain amount of employment is created that helps increase generation. Of income. Income that will later return to the economic flow through goods and services.

The type of profit that the investor receives comes precisely from the realization of that flow that the companies receive as income and that they can return to them in the form of dividends (or in their case yields ). Also, the company earns from the revaluation that the market gives it in the form of capitalization, which generally increases the price of the instruments it issues on the stock market.

Only experts win on the stock market.

Many people who don’t invest in the stock market, even intentionally, often stay away because they feel unprepared or think it takes an expert to beat the market. The reality is that you do need to have some kind of preparation, but only when you are going to operate your own investment account.

When you do not have the time, but you do have the resources, to maintain an investment account it is possible to go to an advisor, who should make you a profile and tell you about the entire set of opportunities that exist in the financial market.

If you decide to operate your own account, you should know that even experts make mistakes in their forecasts. This is actually common, but that doesn’t mean you’re going to lose your money. Depending on the types of instruments you trade, with some experience and your own technique, you will realize that the market is cyclical and that a general drop in prices does not always mean that it is sustained or the same for all instruments.

Investing in the traditional is better.

Many people believe that investing in traditional instruments such as debt bonds, gold or dollars is the best way to grow their money, however, except for dollars, this can be the safest but not always the best. It has been mentioned in this series that the real return on some traditional instruments such as debt bonds actually ends up being minimal.

In the case of dollars or gold, these also depend on the market price (which is in fact highly exposed to international events), which does not always mean that you can sell above the price at which you bought.

Something similar happens when it comes to traditional investments outside the stock market but at a microeconomic level. When you choose to invest in physical businesses, it is always necessary to be fully informed about the market in which you are participating, the competition, the type of consumers, etc.

Sometimes it is advisable to go to specialists to be able to start your own business, which does not always mean that it will be profitable in the long term. This also implies, most of the time, some preparation so that everything is handled in order and the accounts can provide returns.

The latter is very different from investing in the stock market, where the information is always up to date and you always know about your gains or losses.

Want to learn about trade your money on the stock market: as a trader/as an investor

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