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Investing in stock is very much like betting on a horse. It just takes that much longer to win or lose. But, in essence, it is the same. In the case of stock, you are betting on the company, the board of directors, the product sales, the skills of the employees. If you are right, that the skillset of the company is good, then their stock prices will rise. If the skillset is lacking, the stock prices will fall. It all depends on the mood of society and the skills of the people involved. Recently, banks have been taking some heavy losses because they exercised poor judgement in making loans which were not good loans. And now, the people who have those loans can not make the payments and are being foreclosed on. Bank stocks have been taking a beating as a result. People who bet on the banks are also taking losses by having their stock worth less and less every day. So, bottom line, look at investing as gambling. Do not bet more than you can afford to lose and try to pick wisely and don't expect a return for years and years. Never watch a stock from day to day or you will go crazy with the ups and downs that happen all too frequently. Stocks and bonds are long term investments. Like with any other form of gambling, the more you bet, the more you can win, but also, the more you can lose. With some forms of investment, you can even lose more than your original investment. Look at the French bank that made the news recently. One trader, making very poor trades, caused the bank to lose big time. |
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