Subject: Why do new investors lose money in the stock market?

David Hunt Profit Hunters Wealth Retirement SMSF Investment Trade
Targetting Times & Trades in Australian Shares Forex Commodities
Using Cycles and Technical Analysis
Question: Why do new investors lose money in the stock market?


Is that true?

In my experience in nearly 40 years now:
  • Some new investors do lose money and
  • Some new investors don’t lose money and may break even or make a bit
  • Some new investors luck into a big winner or 2 and start to believe they are invincible
Often the first category, if they stick at it, are the most successful as they feel the emotional pain of loss and spend time learning from others and by watching how markets move to manage and control risk and learn how to make profits and keep them.

The second category usually are not in it for the long run because they received no pain from the experience (no pain no learning) and no reward for the experience and so have no emotional juice around the experience

The third category usually have the worst stories in the long run. They have started their investing life with the emotion of elation and feel that is the only way to be. Yet most investing and trading is taking action and then monitoring to see if things have changed and acting decisively despite what we may feel emotionally.

Its like a Lottery ticket winner. According to Ryan Hart What Percentage of Lottery Winners Go Broke? (Plus 35 More Statistics)

. 1/3 of Lottery winners eventually declare bankruptcy and are more likely than the average to declare bankruptcy in 3 to 5 years.

What Percentage of Lottery Winners Go Bankrupt?
  • The National Endowment for Financial Education (NEFE) denies that 70 percent of lottery winners end up bankrupt within five years after receiving a large financial windfall. This is an incorrect statistic that has been credited to the organization by Time, Fortune Magazine and many others.
  • Lottery winners are more likely to declare bankruptcy within three-to-five years than the average American (CFPBS).
  • Nearly one-third of lottery winners eventually declare bankruptcy (CFPBS).

Here is another take on Lottery winners, bankruptcy and happiness 23 Lottery Winners Bankrupt Statistics - BrandonGaille.com

- another says they are more likely to be over weight.

The moral of the story for investors is:
  1. Get educated about how to make decisions in the markets to enter, exit and control risk either using fundamental analysis technical analysis or a combination of both. I prefer technicals backed by reasonable fundamentals.
  2. Get educated and in so doing Try and test methods taught by others - test them for results and for whether it works for you in terms of time, lifestyle, capital and beliefs.

All the trades I recommend and the outcomes ie entries, exits trade management are left on the PHG Trades Tables on https://profithunters.com.au

website for Free Trial members and PHG Members to see back through history. So they can see what I do as soon as they join and research whether my style suits them.

I have read hundreds of trading books and paid more than $200,000 to the best Traders and Analysts I could find to learn trading and technical analysis to help with my investing and trading. It is a wonderful journey if you have the patience and learning skills. I wish you well - but remember the 3rd category of new investor ie the fast big winner often needs to overcome ego and unlearn bad habits and learn new good ones to avoid being like many lottery winners appear to be.

DAVID HUNT
CHARTIST TECHNICAL ANALYST

"AUSTRALIA’S TOP MARKET TIMER, WHO THE FINANCIAL REVIEW CALLED THE BELLRINGER."

David Hunt is in his element when analysing markets and spends his days answering questions from clients and students on almost any market you can think of – currencies, equity indices and stocks, metals, oil and gas, grains and livestock, interest rates, and futures and options.

With 38+ years trading experience, David is using his positions as CEO of ADEST and the chairman of Adest Trading to help a new generation of investors and traders thrive and prosper in both rising and falling markets.
David has a B Comm (Hons) and M Comm from the University of NSW.

David identifies risks and opportunities as the markets fluctuate using charts technical analysis daily. He shares with his Profit Hunter Group members his expert long term market advice and recommendations and seizes opportunities as they appear in the short to medium term.
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Adest Trading Pty Ltd Profithunters.com.au, 2/13 Salisbury Rd, 2033, Kensington, Australia
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