Make Money In Stocks

The reason the message of the stock market has been made to sound so optimistic is that Wall Street and the politicians who pass laws supporting Wall Street understand that to make the stock market more liquid, it needs a lot of money and large numbers of people participating in the trading. For them, that means that they need to cater to and enlist the middle and lower classes. Thus, the stock market has been made out to be the savior of people and the safety nest for retirement. For most people it is neither, and for quite a few it is the exact opposite. The market’s overall message is quite misguiding.

One of the biggest areas where people tend to be mislead is risk and how much of it there is. Once you opt in to invest in a stock, your money is at 100% risk at any given moment. In a world of wars, accidents, natural disasters, explosions, terrorism, diseases, pollution, fierce competition, destruction, and fraudulent CEO’s, no company is safe from complete collapse at any time. Even “good” companies carry this risk, as at one time British Petroleum (BP) was considered a great oil company and had actually been a good investment for decades. Even if a company does not completely implode and collapse, people can still lose a large portion of their investment from the company’s poor performance or market ups and downs.

Another unmentioned reality of the stock market is that in the end, it is a zero sum game. That means for someone to win, someone else has to lose. Typically Wall Street and insiders win first and the leftovers go to middle class retail investors.

Over the last decade there have been a few major stock market crashes. There was the Internet bubble and the housing bubble implosion. In the end, most people who made money during the good times simply lost it when the markets crashed.

While the stock market has lots of promise, it also has quite a bit of deceit and dishonest maneuvering. There is no free lunch out there and I hope small investors like myself proceed with great caution.

Anymore with the recent financial shakeup in the market, everyone seems to be shying away from the stock market worried that their investments are too risky to be sound. However, while it may seem as if the stock market is too shaky to be worth investing in, especially given the fact that many investors are pulling out the market causing it to crumble farther, the truth is that financial crisis is actually one of the best times to get in on the stock market if you make educated decisions.

After all, an investment that has the potential to pay out is much better than a bag of money buried in the backyard that has no chance of ever increasing in value. Although the stock market may seem like it will soon cease to exist, history shows that once the economy recovers the market will as well and stocks will soon skyrocket back to their previous rates. In fact, this trend has been proven over and over again throughout history including during Black Monday, both World Wars, the great depression, natural disasters, and presently terrorist attacks.

The fact is that long term payback of stocks during all of these periods remained consistent and predictable making the stock market a safe place to invest even during the most volatile economic conditions. Unlike many other factors in the financial market, stock can be assigned a tangible value and in many cases the market prices have crashed because they are no longer aligned with the company share value. Buyers that exercise the correct amount of discernment however can discover plenty of bargain deals in terms of the stock market that can produce solid results once the market starts to recover.

Keep in mind also that you should not expect to see profits in just a few weeks if you are truly looking for an investment; if quick results are what you want than trading stocks may be a better choice than investing in the stock market.

In order to do this, you need to step back and evaluate companies that show the potential to prosper in the future. While it is impossible to find a stock that is fall proof, there are certain criteria that can help you identify a great stock investment during a financial crisis. One thing that you should look at is how a company performs in its market now. One that has a dominant control over the market such as Google in the search engine world is a much safer bet since it will be harder for competition to tackle their edge.

Second, you should take a look at their current return on equity. A high return means that the company knows how to invest its money well which means that they will be able to maintain steady generation of profits. Other signs include companies that are international and companies that have rising and consistent dividend payments.