Trap #6 Failure to understand the stock market

Quick Points

• While purchasing stock is easy, understanding markets is complex. Many theoretical arguments exist in trying to explain economics and finance. Failure to understand the factors around these topics leave the average investor at a huge disadvantage, especially when trying to go the Do-It-Yourself route.
• The evidence suggests that markets are random. The implications are that trying to predict the market in the short term is extremely difficult. Capitalising on short-term price movements with consistency or accuracy is impossible.
• The evidence shows that success is a function of time in the markets not in trying to time the markets.

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