so it seems like everybody has a story
about how they lost money in the stock
market where they have an uncle or a
brother or a friend who lost a ton of
money and they swear by it and they say
all the stock market is a losing game
nobody ever makes money in the stock
market well in my opinion that is just
not true a lot of people lose money in
the stock market in fact most people do
most people will get involved in the
stock market lose money and that's the
unfortunate truth but what I want to
give you guys today are the five reasons
why most people end up losing money in
the stock market so what I want to ask
you to do if you know somebody who lost
money in the stock market before you
just take their opinion and say okay the
stock market is a good way to lose money
I want you to figure out what it is that
investment and if they did one of these
things I have listed here
maybe you'll begin to understand why it
is they lost money in the stock market
and if you can avoid doing these five
things you can make money in the stock
market but these are the five things
that are most common what people lose
money in the stock market they generated
one of these things or a combination of
these things number one is either over
exposing yourself or having inadequate
diversification I'm here to talk to
anybody about the stock market and they
know what they're talking about they're
going to tell you to diversify so don't
put all your eggs in one basket
unfortunately a lot of time a lot of
people do exactly this they put all
their eggs in one basket and people will
go all in on one stock or one particular
market or one industry as a whole the
problem being when that stock when that
industry or that particular market goes
to their whole investment goes down
whereas if you had a diversity and you
had many different investments maybe one
of your investments goes bad but the
other ones are fine because they're not
affected by that here's an example of
this so most people working for Enron
put their entire pension in Enron stock
and we all know what happened to Enron
people lost a ton of money and some
people lost their entire pension by
having all their money invested in that
company
they were not diversified so if people
are not diversified and they're solely
investing in one industry or one stock
you can lose all of your money or lose a
ton of money another example of this is
people will invest solely in small or
large cap stocks and in most cases it's
good to have a blend of these if you're
if you're invested in any kind of fun do
you want to blend a small cap and large
cap stocks what people end up doing
because this is like the biggest thing I
see with the stock market and just with
my friends that I talk to about the
stock market they all are asking me like
hey how do I like triple my money how do
I double my money in the stock market
and if I pulled them okay well make good
investments that expect like 20 percent
return a year and maybe in five years
you double your money they're going to
be like well that's not very exciting at
all they're not interested so anybody
looking for like double or triple their
money they're looking to take these high
risk bets and these are the people who
end up losing a lot of money or they
lose all of their money because they're
looking for for unrealistic returns
through the stock market in order to get
out in order to double the triple your
money you're generally making a
high-risk investment and when people
make these investments in they go the
wrong direction
when they lose their shirt and they end
up just getting out of the stocks and
they just say okay it's a losing game
but if you're somebody who's looking for
consistent you know 1020 percent returns
somewhere around there per year that's
that's easily doable and you can
diversify and not have as much risk but
if you're somebody looking for these
unrealistic returns you're going to be
making these high-risk investments and a
lot of people lose money by doing this
another thing people do is they invest
solely in stocks and especially with
your 401ks you have a blend of stocks
and bonds a lot of people have automatic
basically every 5 years I think I know I
have this setup of my 401k but where
every 5 years it automatically changes
the structure of it so right now because
I'm younger obviously I'm not retiring
anytime soon I'm going to be able touch
that money until I'm you know I think is
59 and a half anyway maybe more than
that but I got like basically almost
four years for that to build over time
so right now because I'm young I'm
or involved in stocks and weapons Walton
Bond but as I get closer to retirement
that diversification changes and I have
more in bonds and less in stock because
you're not looking to risk your money
the closer you are to retirement a lot
of people make the mistake of having
their entire 401k or their entire
portfolio strictly in stocks and when
the stocks go bad when we're at a bad
market they lose a ton of money so you
need to have diversity you know between
stocks and bonds as well maybe even you
know just get the deposit or whatever
there's other ways you can do this but
most people are solely involved in
stocks and that can be a problem as well
a general rule of thumb that I've always
come across when doing my research is
that you know you want to have a
diversified portfolio with no more than
25 percent of your portfolio in any one
particular thing so you would never want
to take every penny that you had put it
in one investment because that's one bet
and if that bet goes against you you've
lost a ton of money so that's generally
the rule of thumb I follow I've never
invested all of my money in any one
thing I have the investments in many
different areas it has a result you know
even if I lose money on one thing you
know you're not losing money on the
other thing it kind of offsets the
losses but when you're all in one basket
you have the potential to lose a lot in
just a general rule of thumb guys to
people who are looking for a higher
return generally investments that have
the potential to give you a high return
or high risk investments for a higher
risk than investments that could give
you a 10 to 20 percent return something
like that that's more realistic so
number two people invest based off of
tips newsletters or the hot stocks that
are mailed to you this is the biggest
problem I see and what this stems from
is this believe it or not people want to
be able to blame someone else when their
investment goes sour so when they lose a
ton of money they want to be able to say
oh I'm not going to mention anybody's
name but will say Jim gave somebody
stock advice and Jim said this stock has
unlimited potential agreed to invest
every penny you have in this stock and
then we find out that Jim was wrong and
then that way they can go out Jim is an
asshole you I lost some money
Jim pulled me to buy this stock and I
you know that's why I lost money it's
harder to say okay I you know did my
research I like this company and I was
wrong it's harder to say that because
then the blame is on you but you need to
take responsibility of your own
investment do your own research find a
strategy that works for you and stick to
it as a knowing people do they bounce
around with different stock trading
strategies one day they're buying penny
stocks and that's they're buying you
know it's just people need to stick to a
strategy that works for you maybe you
buy stocks based on fundamentals and
you're looking for hold you're looking
to hold stocks for you know multiple
years or maybe you're a short-term
trader and you're holding stocks for a
couple of days maybe you're a day trader
you're trading in and out every single
day find a strategy that works for you
and stick to that strategy don't worry
about what anybody else is doing and
don't allow other people to influence
your decision if you've made an
investment based on your own research
and you put your work in you know own
that investment you know have some
confidence in it and don't let other
people tell you what to do with your
money it's your money at the end of the
day so do not invest based off of tips
or research or any of those hot stocks
newsletters you see going around number
three this is kind of a it's kind of
multiple things fall under this but I
try to throw all these out there well
the first thing is people will hold on
to a losing stock or they do what's even
worse which is called averaging down or
on the other hand sometimes they get
excited and they sell too quickly and
I've done this too so it's something a
lot of people do as far as they sound
too quickly I've never averaged down I'm
happy to say that I know a lot of people
who have and the strategy makes sense in
your mind but it's just a losing bet
because the stock is already losing why
would you want to put more money into a
following stock so most people end up
clinging to a losing losing position
where they just hold on to it because
they're like oh I've lost all this money
I'm afraid I'm going to lose even more
you know it depends I mean if the whole
market is performing badly you know then
you may want to hold on to those stocks
depending on what the company is but if
the company has poor fundamentals and
you know with a bad investment and maybe
time to just cut your losses on it but
what's worse is a lot of people do
what's called averaging down and when
you average down with your essential
doing is you're going to buy more of a
losing position in order to lower the
average price paid per share just for
example sake let's say you bought 10
shares of the stock at $20 a share it
fell to $10 a share and you bought 10
more shares of that stock now your
average price paid per share is 15
dollars so you say okay all I need to do
is have that stock come up to $15 and I
can get my money back out of it that is
a losing bet guys if you're down
don't buy more of that stock it's a
losing bet in most cases I've never
really known anybody who successfully
was losing out of stock decided to buy
more to average down and ended up making
our money back or making any money in
long run maybe there's a couple
anomalies of anomalies where people
actually did that but I've yet to come
across or talk to anybody who has had
success with that trading strategy what
you should be doing and this is just my
opinion because I trade based off a
technical stock analysis I follow stock
charts for the most part I do pay
attention to fundamentals of companies
but I generally am trading in a short
term I'm not holding for long durations
for the most part I do have a couple of
stock so I have a position trade on
where I'm holding it for a long duration
but for the most part I trade you know
swing trades where I'm looking at
basically short term holds based on
charts and data so what I do is if I
make an investment offset I'll set an
actual stop point based on based on the
actual charts of the stock based on
technical stock analysis and in most
cases to offset a trailing stop to where
if it solves a certain percentage or
falls certain dollar amount it will
automatically sell that way I know how
much I'm risking on this investment I'm
not just letting it freefall and waking
up one day checking my stocks and saying
oh look at that I'm down 30% I would set
it where you know hopefully it would
sell as long as it was as long as it
fell during trading hours and didn't
just gap down usually generally would be
able to you know set a level of risk
that you're comfortable with that's what
I do anyway it's so like I said if the
stock is falling and the company has bad
fundamentals just dump the stock and
take the tax loss on it and call it a
day
and you know make another investment in
another day hopefully you do better
research next time hopefully you learn
something from this investment this is a
quote true that I really like I remember
where I came across this but it says bad
short-term investments turn turn into
long-term investments and it's true I
know a lot of people who you know made a
short-term investment and ended up just
holding on to it because they lost a ton
of money I still have a long-term
investment in a biotech company I bought
over a year ago it had fallen
drastically and I was like well it can't
possibly fall anymore bought some shares
of it I didn't invest a ton of money
into it and the stock fell like even
more from there I bought it at 890 a
share I think it fell though just about
too much to share shortly after their
strong lay down on that investment and
I'm still only onto it here I am a
long-term investor in this company that
has bad fundamentals and it's like why
did I do that you know but that's why
I'm a long-term investor because I made
a bad short-term investments in that
stock
I'm still thinking at some point it may
come up but just on principle I just
decided to hold on to that stock to see
if it will come up I don't have a ton of
money invested in it then on the other
hand a lot of people end up selling too
quickly that because they'd be excited
when their investment is up and often
they sell too soon and this is tough
because there's a fine line between you
know selling too early and then being
greedy and writing a winner into a loser
you don't want to do either one you kind
of want to be somewhere in the middle so
no general rule of thumb that I would
follow is never sell a rising stock if
that stock is in a healthy uptrend and
it seems to be going nowhere but up
until you see a reason to sell maybe you
see it starting to level off maybe
you're seeing it sell off based on
volume that is a sign that okay maybe
it's time to sell the stock but if the
stock is flying you know keep that stock
and you know take as much money from
that position as you can from that
investment now a lot of people you get
excited you're like okay well I've made
you know I made some money here I want
to make sure I don't lose it so they
sell it next thing you know what stock
is up even more that's a couple days and
I shovel weeks and you're kicking
yourself saying why did I sell so and
I've done this myself - I've sold rising
stocks and I made money on them but I
left a lot of money on the table so you
kind of want to you know have a little
bit of discipline with that
say okay if the stock is rising I'm not
going to sell it but if I do see that
it's a dupe I do see signs of a sell
offer I do see that it's reaching a peak
that's what I'm going to sell on the
other hand do not be greedy and ride
winner into a loser because it is better
to so when you can not when you have to
you never want the stock market to be in
control of you you want to be in control
of your own investment and say okay I'm
happy with this profit I'm going to sell
because I want to you don't ever want to
be forced to sell okay so the fourth
reason why people tend to lose money in
the stock market is because they will
chase the stock this is when a stock is
way up and people decide to buy it when
it is on its way up and this is this
make sense because that's generally when
the news headline says that this stock
is performing so well
people buy high and the general idea was
the stock as the idea is to buy low and
sell high
I know if you ask most people what our
very kind I have some stock market
advice a lot of people will say to you
all you should buy low and sell high and
a lot of times you think that they're
mocking because it's like well everybody
knows that but it's funny because so few
people actually follow that rule what
they end up doing is buying a stock that
is way up and then people sell off the
stock goes into a sell-off investors
take a profit and then the stock price
falls soon after so if a stock is way up
it may be heading into uncharted
territories without us support to fall
back on I'm not going to get into it in
this video because I don't want to drag
it out any longer this is just kind of a
quick video here I mean as quick as it
can be it's probably going to be 15 or
20 minutes that seems like the general
will tumble all my videos saying of
being like 15 or 20 minutes but when you
lose you know what you guys who stick
around the whole video I do appreciate
you because I know sometimes I have the
tendency to ramble on a little bit but
look up support and resistance areas for
stocks to understand how that works when
a stock is way up it generally does not
have a support area to fall back on so
it's in uncharted territories ideally
you would have invested in the stock
when it broke out of the base and people
generally get pissed off and say oh you
know I missed out on it I've ever get in
on it anyway and so in some cases you're
lucky if you buy a stock that's way up
you can have luck with it
but you don't buy something just because
it's on its way up you know other
opportunities will come along so just
you know say okay maybe you you had your
eye on that stock and then it went up
and you didn't buy it say well I guess
I'll trust my gut next time and invest
when it's in a basing period you don't
generally want to buy stocks when
they're in a heavy uptrend I know I know
I just I know I didn't follow my own
rule here because I just recently
invested my money back into AMD some of
the money that I have in my trading
account and a lot of people have called
me out on that because they're like hey
you know you're always telling people to
buy when it's in a basing period and I
bought during an uptrend but I bought
based off of the earnings report and I
also have had success with that stock
already last year so I had a couple of
reasons to kind of break my own rule
maybe I'm wrong I'm going to get taught
a lesson
we'll find out an obviously I'm gonna
share my experience of that spot with
you guys just so we can learn from it
but I just wanted to point that out
because I was thinking somebody might
hear me say that and if you watch
another video you would say hey didn't
you just buy a stock that was way the
hell up and I would be like yes I did
but you know I understand the risk
involved with that a running track can
be dangerous if investors are eager to
sell and take profits and generally
speaking the steeper an uptrend is the
riskier it is because more investors are
going to be looking to take profits and
you know get what they want out of that
stock and when they're going into a sell
off that stock become way back down and
in many cases go even lower than it was
before
so your best strategy is to either wait
for another opportunity or at least wait
for that stock to pull back to a support
area so you know there's actual support
for that stock and it's not just hanging
out there in uncharted territories so
look up support and resistance areas for
a stock if you want to understand more
about that that's kind of what I'm
talking about here number five this is
the biggest one and I can't it just
frustrates me so much how many people
out there are pushing this crap on
investors watch the movie wolf of Wall
Street if you want to understand what
was going on with this back end I
believe that
1980s where they were pushing penny
stock some investors with just taken
they're making huge amounts of
Commission giving people these terrible
stocks getting people to invest in penny
stocks I don't know what the allure is
with penny stocks so everybody wants to
buy this stuff and a lot of it's
absolute crap I've never invested in a
penny stock I've invested in stocks that
were trading on let me just throw this
out there too in case you don't
understand this a lot of people don't
run this but a penny stock is defined by
the SEC at the stock that trades under
$5 a share most people would think it
was a stock that trades for under $1 a
share but actually any stock under $5 a
share is considered a penny stock most
people just love the idea of investing
in something and seeing that stock
quadruple in value making a ton of money
and some people have luck with that but
the reason I have this in quotes is
because I don't even see penny stocks as
an investment I think it's a freaking
gamble so I would almost call this
gambling in penny stocks so penny stock
could be a very dangerous investment
match for a couple of reasons most of
these companies are not profitable and
as a result there's a much higher risk
of them going bankrupt if a stock goes
bankrupt you'll be lucky if you see any
of your money because you're probably
going to be one of the last people to
get paid when all the money is settled
in the end so when you're investing in a
penny stock in a company that's not
either profitable there's a high amount
of risk associated with that investment
because they're not listed on the major
exchange whether they're on like the New
York Stock Exchange and the Nasdaq
exchange listed stocks which are those
stocks are easy to sell because there's
generally always a buyer when you're
looking to sell with these because we're
not listed on a major exchange there's
less people actively creating them so
they can be difficult sell especially if
you have a lot of shares of that stock
so maybe you made an investment you're
up and you can't get rid of those shares
because nobody's looking to buy them so
that's something else you have to
consider with penny stocks as well this
is the biggest reason guys there's a lot
of scammers out there when it comes to
penny stocks they're one of the biggest
is called the pump and dump scheme I
talked about this in another video I
can't remember off the top of my head
which 101 but this is basically where
you'll have somebody send a newsletter
or
that says this is the next hot penny
stock now before they send that email
these people bought a huge position in
that stock okay and then they go and
they send this email around and they
make these videos and they basically
inflate that stock and they tell
everyone all this is the stock to buy
this is the hot penny stock then what
happens if that stock price goes up as
other people buy it when that stock
price gets to a level that they're
comfortable with they sell out and they
just leave everybody else with the stock
that soon to crumble because there's
nothing really supporting that stock
price so that's what's called a pump and
dump scheme there's a lot of other scams
and schemes up there with tiny stocks so
definitely do your research on those
even just out of curiosity see you
understand what's going on but that's
one of the main ones the only people
that I know that make money off penny
stocks are people who actually short
sell the pump and dump schemes I know
one of these people is Tim Sykes I don't
know if you guys follow him at all I
don't really I've never really looked
into a strategy from what I know
basically he short sells pump and dump
schemes so when he sees a stock that's
way up and he can tell us being inflated
Hill by Hill short sell that stock and
take money from the following stock
price on that so I know him and some of
the people that invested in strength
with his strategy have made a good
amount of money in penny stocks but it's
not in the conventional way of buying
them low and selling of high short
selling which is much more complicated
so they're not an investment for
beginners and unfortunately there's a
lot of people out there that are pushing
these on new investors and I understand
the idea behind it you say okay well I
don't want to buy a stock as a hundred
dollars a share I can buy a stock that's
a couple dollars a share and it's a much
shade for investment stock price has
nothing to do with how safe an
investment is if it's a cheap stock if
it's expensive stock that has nothing to
do with the company itself for the most
part and people look at it as okay the
$2 stock you know one and I buy a
thousand shares instead of buying you
know let's see if there's $100 share of
stock instead of having 20 shares of
that stock I'd rather have a thousand
shares of a $2 stock because that way I
feel like I have more of it and it's
just a bad strategy that people have
another reason is because they're very
difficult to find credible information
on Penny Stocks because they're not
actually required to file when security
is an exchange commission so it's hard
to find good information on this company
because there's so much that they're not
required to actually disclose in my
opinion new investors should avoid penny
stocks at all calm at all costs if
you're looking to invest in the stock
market and just play around I mean just
find a couple of dividend stocks you
know maybe like coca-cola or didn't eat
or something like that you know there's
a lot of these stocks that people will
buy like for their kids because they're
just evil companies that have been
around for a long time and they don't
really do much there's not a ton of
volatility with them but it can be fun
for you and give you that first step in
there watching stock charts and learning
about investing I would say do that over
investing in penny stocks so if you have
anybody telling you to invest in these
even if you Kerr to people how to go up
with them guys it's it's like lightning
striking twice in some cases I don't
know a lot of people I don't know a lot
of people who one after another have a
lot of page stocks what happens in most
cases with people I've talked to they'll
invest in a penny stock and then they'll
win money you know the win a ton of
money on that bet and then they end up
investing in other penny stocks they can
they could do it again and they lose all
that money I don't know a lot of people
who consistently take profits I don't
know anybody who is consistently taking
profits from penny stock investments in
that way but that's pretty much it guys
those are the five main reasons people
lose money in the stock market so if
you're looking to get into the stock
market and you're considering doing any
of these five things try to avoid these
at all costs and like I said if you know
anybody who says oh the stock market and
losing is a losing game you're going to
lose your money ask them what they
actually did when they invested how do
they decide to invest in the stock if
they did any of these five things
maybe that's why you didn't have success
with the stock market well that's pretty
much all I got for this video guys if
you have any topics you want me to cover
in other videos make sure you drop me a
comment below if you guys are invest if
you guys are interested in my own stock
market trading guide I do up my
beginner's guide to the stock market
training I will link up to that in the
description there should be something
popping up here on the screen as well
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