People and especially players have made good money on stocks lately. Recently, many newbies have gained a lot on the GameStop post. Last year, some earned more from stocks than from their jobs. Does this mean that most people should try to buy stocks off the market? Is it best to trade stocks on your own or get help from a financial advisor?
It has many advantages over individual investors making better decisions. They hire the brightest minds, have managers with long experience in many investments, collect vast amounts of information about the entire stock market, conduct extensive analysis of companies' management and opportunities, and use technological tools and artificial intelligence to make extraordinary investment decisions. Experts often have a more nuanced and detailed understanding of reality than beginners. They have seen many different models in the stock market and can quickly place a new stock on an experienced model.
However, recent examples show that financial companies charge high fees that "eat" our profits. Some even tricked us into making the wrong decisions or mostly thought of their own interests. Perhaps this has weakened our confidence in the financial service providers we want to invest in ourselves. New internet solutions make it easy and affordable to trade stocks on your own, even dogs can trade today.
Investments are uncertain decisions because no one knows what the future will bring. When the brain doesn't know what's going to happen, it creates perceptions and emotions that cause a misjudgement of reality. We make a lot of mistakes because we rely too much on our own beliefs and misjudge what reality looks like. Everyone who invests creates mental ideas about how the price might evolve and what will affect the price. However, if the situation develops differently, both experienced and beginners will be wrong. No one knew that the GameStop bubble would result in a large number of startups earning far more than professional investors.
Regardless of expertise, optimistic emotions can increase risk appetite, while negative emotions make investors more cautious. Anger can trigger bad choices. Those who have already purchased a falling stock have a better chance of making a profit than those looking to make a profit. The goal of making money leads to beginners waiting too long to sell a stock that has fallen. They are waiting for the stock to rise again despite falling and they are losing more money. Others adapt at a loss but sell as soon as it starts to rise and sadly miss out on most of the gain.
Beginners may think too narrowly. They focus on a few stocks, but professional firms have many investments in different markets with both short-term and long-term horizons. While many GameStop spenders only invest in this stock, pro gamers have plenty of alternatives.
Regardless of experience, people are influenced by subjective advice. A stock has a 30% chance of success better than a 70% chance of failure. The brain is also not that good at assessing uncertainty and risk. One of the most well-known decision traps is the Swarm behavior. Traders follow the flow and trade against each other, so pumps and dips are created by many simultaneously trading. Most newbies feel caught up in the excitement of the stock market, especially when prices change quickly and unexpectedly. It can lead to hectic and impulsive decisions that are not so bright. The advantage of professional traders is that they have a plan for how to act in unexpected situations. Plans are made “with the head cold”, and with the collaboration of several different experts in the same company. Compared to second portfolios, they generally tend to outperform in the long run.
To wrap this up, we can ask ourselves the following question: Does feeling like a skilled investor work? One of the biggest investment failures in the stock market is high self-esteem. Intelligent and talented people doubt less, think less, and make less self-criticism than beginners. Confident people think more narrowly about what could happen, they believe they know why things happen, and they think they can handle any surprises. A humble beginner mindset can be more profitable for any type of investor.
To me yes , but invest which doesn't effects you even if you loose .