There is a lot of negativity out there in the world, but I think it is all coming from the wrong places. The only thing that makes a lot of money is money itself. When you are going after what you want, you are going to attract the wrong people.
The question is, can you go negative in stocks. In the past I have seen a great deal of negativity in stocks, and it has always been a little dangerous. As someone who has gotten into stock investing in the past, I can say that there are a number of factors that go into how you decide to invest. The biggest factor is your psychology. If you are a new investor, you are going to be more receptive to negative news than most people.
For some reason, I think negative news might be more dangerous if it is accompanied by the risk of loss. If you are a new investor and you invest $10,000 in a security that will go up in price by one penny on news that it is going to go down by one penny, then that is a big risk. But people who have more experience are more likely to take the higher risk of a positive news event that does happen.
My point is that new investors are going to be less willing to be so gullible. They don’t have the same “I want to get rich now” mentality that we have. We think of the stock market as something that you can just grab right away and ride the roller coaster of your life into your future.
This is the case with most of us. We think about what we need to do in our life now as if our next action to pay for it. If it happens to go down and we need to pay for it, then we will act like we have the time to do it right now. If it goes down and we have too much to do in our life, then we will act like we are going to be distracted right now.
When the S&P 500 is down and we really need to make a choice today, we act like we are going to get involved in the market. We will probably buy stocks. It feels like we are just “trying to make money” rather than really being in the market to make money.
When the SampP 500 is down and we are in the market, we act like we are going to spend the day at the gym or something. We will probably go shopping. It feel like we are just going to do whatever it takes to get rid of whatever it is that we feel like we need to get rid of.
The SampP 500 is a good bet for stocks. It really is that good for stocks. We can get a lot of high-profile stocks that we feel like we can do something about.
I’m not sure I’ll be purchasing any stocks for the SampP 500 because I don’t know what the SampP 500 is. It’s a massive stock, but that doesn’t make it a great stock to buy.
A stock that we feel is a bad stock to buy, is a stock that we feel will get the wrong results. When you hear about a stock you are convinced will do well and you buy it, you’re not thinking about what the results will be. That’s why a lot of stock funds are very conservative. They know how to buy stocks with a long-term track record, but they can’t predict the future.
