For some, knowledge about the stock market and how it works is quite often limited.
Here is an article from howstuffworks.com which breaks it down:
For a new investor, the stock market can feel a lot like legalized gambling. “Ladies and gentlemen, place your bets! Randomly choose a stock based on gut instinct and water cooler chatter! If the price of your stock goes up — and who knows why? — you win! If it drops, you lose!” Isn’t that why so many people got rich during the dot-com boom — and why so many people lost their shirts (not to mention their retirement savings) in the recent recession?
Not exactly. But unfortunately, that’s how many new investors think of the stock market — as a short-term investment vehicle that either brings huge monetary gains or devastating losses. With that attitude, the stock market is as reliable a form of investment as a game of roulette. But the more you learn about stocks, and the more you understand the true nature of stock market investment, the better and smarter you’ll manage your money.
Read more here
Cover Image: madamenoire.com