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mazingerz88's avatar

Why are some people into stock investing, others not?

Asked by mazingerz88 (19058points) April 1st, 2011

I read statistics once that America has thousands of millionaires due to investing in the stock,bonds,options etc. markets. I’m wondering why there isn’t more since you can start learning how by putting $500 dollars or less in an online trading site.

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14 Answers

marinelife's avatar

Some people are more risk averse. They want a guaranteed return on their money.

Or they don’t understand the concepts of stock trading.

Not everyone has money to invest that they can spare.

mazingerz88's avatar

@marinelife Yes good one on people being risk averse. The not understanding the concept I think is fixable if one really wants to understand what with all the free info out there. Not having money to invest, yes but I guess if five people who are interested and not so risk averse could chip in, maybe that will be enough to try?

math_nerd's avatar

What can a stock buy you? I bought some AAPL when it was 40 a share. I can’t walk into a Apple store and grab stuff off the shelves. For the most part stocks are worthless. The only value is dividends or hoping someone is dumb enough to come along and buy your imaginary money.

And I made a fuckload from AAPL. But someone lost. <—That is key, someday you will be the guy that lost.

gailcalled's avatar

@math_nerd: ^^ That would be me. On advice of all the family after I had bought my first computer (an eMac in 1996), I bought Apple stock at $40. Then it plunged to $20.

So I sold. What happened next? You have to ask?

Adirondackwannabe's avatar

Some people know how to read a balance sheet and income statement and aren’t risk adverse, so they don’t mind playing the market. It’s not for everyone.

mazingerz88's avatar

@math_nerd so is investing in stock exactly like walking in a las vegas casino and pulling out before you lose what little gain you got? And of course only a few actually do that…

JilltheTooth's avatar

And yet, some of us manage to live quite comfortably from the dividends of low-risk and blue chip stocks. Like anything else, being educated and prudent is the key here.

zenvelo's avatar

@math_nerd @mazingerz88 Investing in stocks is not a zero sum game. Profitable corporations create wealth for the owners through both increased value (measured in stock price) and in payment of dividends (providing direct returns to shareholders).

If I buy a share of XYZ for $10, and it pays 25 cents per quarter in dividends, I have an income stream. If, after 2 years, the stock price hasn’t moved, I can sell for $10, and I will have made 20% on my money. Even if the stock had declined to $8.05, I would not have lost money, just not gained much.

Investing directly into individual stocks takes a lot of time and continual attention to do properly and reduce risk.

JLeslie's avatar

Risk adverse

Don’t really understand what a stock is

Heard stories of people losing all of their money in stocks

Completely unfamiliar with stocks

CaptainHarley's avatar

Some people, like me for instance, are less interested in acquiring wealth than in things like spending time with their spouses and children, or motorcycle riding, or working for worthy causes, etc.

I rather suspect that life is going to be far more fun for the latter, than for the former.

faye's avatar

I have a financial advisor buying stocks for me. I made money on one stock I bought years ago but more than lost it on others. I think you have to be willing to research, research.

creative1's avatar

I bought Bank of America stock at just under $5 a share and put all my tax return into it, I had faith in the company I was working was actually a strong company but because of all of the word of mouth about the Tarp and the merge of Countrywide and the forced merge of Merrill Lynch in the end I knew we would come back strong and would turn around with in months I tripled my money and bought a new car for cash. The stock market can be a good thing if you know about the company and are willing to wait through the bad times for them to overcome them. Word of mouth does alot to the price of stock it can make it go up and make it go down just look at when they discuss Steve Jobs health and Apples stock. When looking at stock you need to look long term of a company not short term and not panic for the little talk. I still have Bank of America Stock now.

YARNLADY's avatar

Most of these answers show a very basic misunderstanding of stock investing. Stocks are a vehicle for people with the thousands or millions to help invest in our country. Those of us with a few hundred or a couple of thousand to invest can rely on mutual funds to make money, or play around with various small amounts for fun.

Zaku's avatar

Some people avoid stock in immoral companies, since they don’t want to contribute to immoral activities, such as accelerating the destruction of our planet (e.g. gas/oil, Monsanto), or economic injustice (e.g. banks).

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