And if so – then why is the public not enthusiastic and investing in the stock market? Well, the public prefers to manage the money through investment managers because they just do not understand it and are afraid of it. Although he really should not be afraid. Investing is not nuclear physics and it is not really a complex field, and the truth is that there is no such thing as experts – no one knows better than you what is expected to be, there are no prophets, there are only those who claim to be prophets. All the wisdom is to properly distribute the investments and avoid mistakes as much as possible.
The public treats the stock market as a casino – not the entire public but large parts of it. We will try here to refute this reference – first, the casino has the “house” that always earns at the expense of the players; In the stock market, everyone can theoretically win – if the market rises, there is no denying that all market players will win, it is not at the expense of someone else (except in Maof options where the position of one is opposite the position of the other, and if the first wins the other loses and vice versa).
Beyond that, over time such markets are rising – that is, if you look at the indices over time in Israel and abroad you will see that stock markets and bonds are rising. What a gamble it is if over time the markets rise. So true, it’s not every year, there are also periods of declines and there are also landslides. But overall a long-term average, the stock markets give an average handsome return that exceeds the return on solid channels.
And another important recurrence – stock prices behave as stated over time depending on the financial performance of the companies – if the company shows continuous business improvement, increase in profits and revenue it is expected to be reflected in the share price, and this eliminates the casino / gambling theory. Investing in stocks directly simply requires a classic analysis of reports to locate the most attractive investments.
Still – do not invest in stocks more than you can afford to lose. Investing in stocks is risky – so what if in the long run you make a profit.
Maybe you are looking for an investment or can invest in the short term. There are times when the indices go down (not for a long time according to the history test), and no one guarantees that what was in the past is what will be in the future, and in general – investing in the stock market is a risky investment, you can test, evaluate, analyze a company think it grows And accordingly you estimate that the price of its share will rise, and the opposite happens. No immunity, no insurance certificates, but risky as it may be, a stock market is an investment. If you test, analyze and then invest it is an informed investment, if you invest long term and you invest in indices under the assumption that the index increases over time, it is an informed investment.
The problem for most of the investing public is greed and fear – when do investors enter the markets? When does the stock market make headlines? But when does the stock market make headlines? When the prices are high, when there is interest, but then it is already a high entry point, and the herd that enters only further raises the prices that in many cases detach from their economic value. In the end, the economy wins and then the stock market falls, and the herd that enters last (this is how a herd is), and exits first (this is how it is a herd) – loses huge sums. These investors are not investors, it’s a gamble, it’s a casino, and that’s the important conclusion of the whole discussion – a stock exchange is not a casino for those who invest – testers, analysts, thinkers, and/or long-term passive investors, a stock exchange is not a long-term investor casino. But if you are the herd that comes in when the stock market comes to the news or when the neighbor tells you that he earned tens of percent on a stock and you are tempted to invest in it, then the truth is you gamble and for you, the stock market is a casino – everything in the eye of the beholder – an investor sees a stock market; A gambler (herd) sees a casino in front of him.