Why Most Small Investors LOSE Money in Stocks | Finance Hacked
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FINANCE HACKED team would like to thank the audience for their interest and support of the Channel in the past time. We hope that the content of FINANCE HACKED will bring long-term value to the audience.
All contributions to support the development of the Channel, dear viewers can send to:
- PayPal: https://paypal.me/FinanceHacked
- Wise: https://wise.com/pay/me/hongnguyenphuongd
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Are you tired of losing money in the stock market? You're not alone. Many individual investors dream of wealth through stocks, but the reality is often disappointment and significant losses.
In this eye-opening video, we dive deep into the real reasons why most small investors struggle to profit and often suffer heavy losses. We'll uncover the crucial differences between individual and institutional investors, including:
💰 Capital Disparity: How big money manipulates the market.
⏱️ Time Horizon Differences: Why patience is a virtue in investing.
🎯 Focused vs. Diversified Strategies: The power of concentration.
⚡ Transaction Execution: How institutions make rapid gains.
🧐 Depth of Research: The importance of thorough analysis.
📈 Stock Selection Strategies: Avoiding the "hot stock" trap.
🧠 Knowledge and Theory: The fundamentals you might be missing.
🎭 Understanding Market Psychology: Decoding institutional moves.
⏳ Trading Frequency: The pitfalls of constant trading.
📊 Long-Term vs. Index Investing: What truly delivers returns.
Beyond these fundamental differences, we'll also explore common mistakes individual investors make, such as chasing the market, failing to cut losses, excessive trading, lacking a strategy, ignoring fundamental analysis, and over-relying on others' advice.
But it's not all doom and gloom! We provide practical and actionable advice to help you overcome these challenges and improve your investment success, including:
💪 Enhancing your financial strength.
⏳ Adopting a long-term perspective.
🎯 Focusing on high-potential stocks.
⚙️ Building a scientific trading system.
🧐 Strengthening fundamental analysis.
📚 Mastering technical theories.
🛑 Implementing a strict stop-loss strategy.
🧘 Improving psychological resilience.
🛡️ Diversifying risks wisely.
🚀 Committing to continuous learning.
Don't let the stock market be a source of frustration. Watch this video to understand the game and equip yourself with the knowledge to make smarter investment decisions.
🔔 Subscribe for more insights on how to hack your finances and achieve financial freedom!
#StockMarket #Investing #PersonalFinance #InvestmentTips #MoneyManagement #StockTrading #FinancialEducation #WealthBuilding #InvestorMistakes #MarketAnalysis #FinancialFreedom #FinanceHacked
----------------------------
FINANCE HACKED team would like to thank the audience for their interest and support of the Channel in the past time. We hope that the content of FINANCE HACKED will bring long-term value to the audience.
All contributions to support the development of the Channel, dear viewers can send to:
- PayPal: https://paypal.me/FinanceHacked
- Wise: https://wise.com/pay/me/hongnguyenphuongd
----------------------------
Are you tired of losing money in the stock market? You're not alone. Many individual investors dream of wealth through stocks, but the reality is often disappointment and significant losses.
In this eye-opening video, we dive deep into the real reasons why most small investors struggle to profit and often suffer heavy losses. We'll uncover the crucial differences between individual and institutional investors, including:
💰 Capital Disparity: How big money manipulates the market.
⏱️ Time Horizon Differences: Why patience is a virtue in investing.
🎯 Focused vs. Diversified Strategies: The power of concentration.
⚡ Transaction Execution: How institutions make rapid gains.
🧐 Depth of Research: The importance of thorough analysis.
📈 Stock Selection Strategies: Avoiding the "hot stock" trap.
🧠 Knowledge and Theory: The fundamentals you might be missing.
🎭 Understanding Market Psychology: Decoding institutional moves.
⏳ Trading Frequency: The pitfalls of constant trading.
📊 Long-Term vs. Index Investing: What truly delivers returns.
Beyond these fundamental differences, we'll also explore common mistakes individual investors make, such as chasing the market, failing to cut losses, excessive trading, lacking a strategy, ignoring fundamental analysis, and over-relying on others' advice.
But it's not all doom and gloom! We provide practical and actionable advice to help you overcome these challenges and improve your investment success, including:
💪 Enhancing your financial strength.
⏳ Adopting a long-term perspective.
🎯 Focusing on high-potential stocks.
⚙️ Building a scientific trading system.
🧐 Strengthening fundamental analysis.
📚 Mastering technical theories.
🛑 Implementing a strict stop-loss strategy.
🧘 Improving psychological resilience.
🛡️ Diversifying risks wisely.
🚀 Committing to continuous learning.
Don't let the stock market be a source of frustration. Watch this video to understand the game and equip yourself with the knowledge to make smarter investment decisions.
🔔 Subscribe for more insights on how to hack your finances and achieve financial freedom!
#StockMarket #Investing #PersonalFinance #InvestmentTips #MoneyManagement #StockTrading #FinancialEducation #WealthBuilding #InvestorMistakes #MarketAnalysis #FinancialFreedom #FinanceHacked
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LearningTranscript
00:00The reason individual investors suffer heavy losses in the stock market,
00:05investing in stocks is often seen by many as a path full of hope, yet it comes with its own
00:10challenges. Countless individual investors carry dreams of getting rich, hoping to earn enormous
00:18profits from the stock market. However, reality often leaves them disappointed,
00:24as most individual investors find it difficult to make money and even suffer significant losses.
00:31Why is it so hard for individual investors to profit? Today, we will delve deeper into this
00:38phenomenon, helping you understand the root causes and providing some useful advice to avoid taking
00:44unnecessary data in your investments. First, there is the significant disparity between
00:51individual and institutional investors. The primary difference lies in capital strength.
00:59Large institutions often possess capital worth hundreds of millions or even billions of dollars,
01:05while individual investors may only have tens or hundreds of millions of DAWN.
01:12This vast capital gap allows institutions to manipulate the market easily, to leverage
01:18information more effectively, and to benefit from a larger space for investments, while individual
01:24investors are constrained by their limited funds and struggle to secure a favorable position,
01:30imagine an institution with billions of dollars that can instantly buy or sell a large quantity of
01:36stocks to impact market prices. Meanwhile, an individual investor with only tens of millions of DAWN
01:44cannot influence stock prices. This capital disparity enables institutions to dominate the market,
01:52leaving individual investors merely to follow, often at a disadvantage. Second, there is a difference in
02:00investment time horizons. Large institutions often spend months or even years researching and investing in a
02:08particular stock, whereas individual investors might only spend days or weeks trading.
02:15The lack of patience and deep analysis makes them prone to missing out on good opportunities.
02:22Institutions can invest time in studying a company's financial status, analyzing technical charts,
02:29monitoring market trends, and developing detailed investment plans.
02:34In contrast, individual investors are frequently swayed by market emotions,
02:41chasing after the ups and downs without a systematic investment strategy.
02:46Third, there is a difference between focused and diversified strategies.
02:52Institutions typically concentrate on one or two stocks each year,
02:57using all their resources to manipulate and profit greatly before moving on to another stock.
03:02In contrast, individual investors invest in dozens or even hundreds of stocks each year.
03:11This dispersed capital makes it challenging for them to construct an effective portfolio.
03:18Concentrating capital allows institutions to push a stock's price up or down efficiently,
03:24generating huge profits, whereas individual investors, due to their diversified investments,
03:30are unable to exert a large impact on stock prices, leading to unstable profits and even losses on some stocks.
03:39Fourth, there is a difference in the way transactions are executed.
03:45Institutions prefer to concentrate their capital to achieve rapid and significant gains
03:50by buying or selling large volumes of stocks in a short period,
03:54thus quickly impacting prices and reaping profits.
03:59Meanwhile, individual investors tend to disperse their capital by buying multiple stocks
04:05with the hope of offsetting losses in one stock with gains in another.
04:10This approach results in lower and less stable profits.
04:15Large institutions can induce sharp price fluctuations in a short time to earn returns,
04:21but individual investors, limited by their capital, cannot manipulate stock prices in a similar manner,
04:28making it difficult for them to secure significant gains.
04:32Fifth, there is a difference in the depth of research.
04:37Before investing in a stock, institutions often conduct in-depth research on both fundamental
04:43and technical factors, simultaneously formulating meticulous plans for market manipulation.
04:49In contrast, individual investors typically decide to buy or sell within minutes based on intuition
04:57rather than systematic analysis.
05:01Institutions leverage teams of experts to analyse financial reports, industry prospects, competitors,
05:08and other factors, combining this with technical chart analysis to develop precise trading plans.
05:15Meanwhile, individual investors, lacking sufficient knowledge and analytical skills,
05:22are easily swayed by short-term trends, leading to poor decision-making.
05:27Sixth, there is a difference in stock selection strategies.
05:32Institutions tend to choose overlooked or undervalued stocks to profit from,
05:37while individual investors often chase hot stocks,
05:41buying at high prices and suffering losses when prices drop.
05:46Stocks that are less noticed are often accumulated by institutions at low prices
05:51and then driven up for large profits.
05:55On the other hand, the trendy stocks frequently bought by individual investors
06:00can be exploited by institutions that offload their holdings, leading to heavy losses.
06:06Finally, there is the difference in knowledge and theory.
06:09Although institutions have advantages in capital and information,
06:14they still place great importance on investment theories and techniques.
06:20For individual investors to succeed,
06:24it is necessary to learn scientific analysis methods and build reasonable strategies
06:30rather than relying solely on emotions and luck.
06:33Investment theories such as Dow theory, trend theory, and GAN rules have been thoroughly researched
06:41and applied by institutions, whereas many individual investors,
06:46who have not even mastered basic technical theories,
06:49hastily declare that technical analysis is useless.
06:53This divergence in understanding and application of knowledge
06:57enables institutions to operate in a more scientific and rational manner.
07:02While individual investors are easily influenced by market emotions,
07:08resulting in poor decisions.
07:11Through systematic learning and practice,
07:14institutions have mastered various technical analysis methods,
07:18allowing them to predict market trends and price movements accurately.
07:23Conversely, individual investors,
07:26lacking systematic study and application,
07:28often rely on intuition and emotions,
07:32leading to frequent losses,
07:34institutions also have a superior ability to understand market dynamics.
07:41They keep a close eye on the psychology and actions of individual investors,
07:45fully understanding their behavior so as to know who knows them.
07:50Meanwhile, individual investors often neglect the strategies employed by institutions.
07:56Sometimes even dismissing them as foolish for driving prices up without realizing how they exit their positions.
08:05This gap in understanding allows institutions to manipulate the market more effectively,
08:11while individual investors become easily manipulated,
08:15unable to respond in time and suffering losses.
08:18Institutions use their deep understanding of individual investors' psychology and behavior to precisely adjust market operations and control stock price trends,
08:30whereas individual investors, lacking such insight,
08:34are unable to adjust their strategies promptly,
08:37resulting in losses when the institutions take advantage,
08:40before we delve deeper.
08:43Don't forget to follow our channel for more insights about money to help you quickly achieve financial freedom.
08:50Finance Hacked warmly greets you and our dear friends,
08:54another key difference lies in trading frequency.
08:59Institutions are patient with their long-term stable profit strategies,
09:03while individual investors trade continuously,
09:06lacking patience and long-term planning.
09:09This enables institutions to accumulate more assets,
09:14while individual investors struggle to achieve financial freedom.
09:19Institutions typically hold quality stocks for an extended period,
09:24benefiting from the steady growth of the company and stable price increases to secure sustainable profits.
09:31Conversely, individual investors, trading incessantly,
09:36incur higher transaction costs and impatience,
09:39leading to losses in short-term fluctuations and difficulty in building wealth.
09:45The difference between long-term investing and index-based investing is also noteworthy.
09:51Institutions focus on specific stocks,
09:55engaging in deep research and precise execution to achieve high profits.
09:59In contrast, individual investors often invest according to market indices,
10:06expecting that an index increase will yield profits.
10:11However,
10:13returns from indices typically do not cover transaction costs and taxes,
10:18making it difficult for individual investors to realize true gains.
10:23Institutions selectively choose stocks for high returns,
10:27while individual investors,
10:30having dispersed investments across many stocks within an index,
10:34face lower returns further reduced by transaction costs,
10:38thus resulting in lower overall investment efficiency.
10:42Beyond these fundamental differences,
10:45individual investors frequently make common mistakes in practice,
10:49which further increase their losses.
10:51One of the most common errors is chasing the market.
10:56Many individual investors are tempted to buy hot stocks in the hope of making quick profits.
11:03However,
11:04these stocks are often targets for institutions offloading their holdings,
11:09which can lead to a sharp decline in prices.
11:13Individual investors get caught in a cycle of buying high and selling low,
11:18ending up with heavy losses.
11:21By chasing high prices,
11:22they often ignore the underlying fundamentals and technical aspects of the stocks,
11:28trapping them when institutions decide to sell.
11:32With hot markets changing rapidly,
11:35individual investors usually cannot exit in time,
11:39resulting in significant losses,
11:41as they frequently lose composure during short-term market fluctuations
11:45and make poor investment decisions.
11:49Second,
11:50they lack the discipline to cut their losses.
11:54Many individual investors,
11:56after buying stocks,
11:58do not set reasonable stop-loss points.
12:02When stock prices decline,
12:04emotions take over and they are reluctant to sell,
12:07resulting in capital being tied up or severe losses.
12:11Cutting losses is a strategy to protect capital,
12:15and individual investors must adhere strictly to a stop-loss strategy
12:19to avoid widening their losses due to emotional decisions.
12:23Those who fail to set stop-loss points often cling to the hope that the stock price will recover,
12:31but in reality,
12:32the losses only deepen.
12:35Setting proper stop-loss points helps investors minimise risks,
12:39safeguard capital,
12:40and prevent the downturn of a single stock from affecting their entire portfolio.
12:45Third,
12:47individual investors often trade excessively and lack patience.
12:53They tend to chase short-term profits
12:55and do not have the patience to wait for the right opportunity.
13:00Excessive trading not only increases transaction costs,
13:04but also makes them miss out on long-term profit opportunities.
13:09Such investors are easily lured by the pursuit of immediate gains,
13:13repeatedly buying and selling stocks,
13:16which escalates trading fees and taxes,
13:19thereby diminishing net profits.
13:23Moreover,
13:23high trading frequency can lead to decisions driven by emotions,
13:28resulting in further losses.
13:30Fourth,
13:31they lack a systematic trading strategy.
13:34Many individual investors do not have a clear plan or set of principles when trading
13:40and are often driven by emotions to make impulsive buy or sell decisions.
13:46Building and adhering to a scientifically sound trading system is essential for achieving stable profits.
13:54Investors without a specific strategy typically struggle to find a consistent model for profitability,
14:01relying instead on luck and emotion,
14:03which leads to unpredictable and uncontrollable outcomes.
14:06In contrast,
14:09a systematic trading approach helps maintain discipline,
14:13preventing emotional market influences and increasing the probability of success.
14:20Fifth,
14:20individual investors often overlook the analysis of fundamental factors.
14:26They tend to concentrate too much on technical charts
14:29while neglecting to evaluate the fundamental aspects of stocks.
14:33This leads to a lack of understanding of a company's true value and growth potential,
14:40making them susceptible to emotional biases and poor investment decisions.
14:46Investors who ignore fundamental analysis may buy stocks when prices are high
14:51without considering the company's profit-making ability and growth prospects,
14:56which results in their failure to exit in time when prices drop,
15:00leading to heavy losses.
15:02Conversely,
15:04those who focus on fundamental analysis thoroughly examine a company's financial condition and industry
15:11outlook.
15:13Thereby choosing quality stocks with long-term investment value for more stable profits.
15:18Sixth,
15:19they become overly dependent on the advice of others.
15:23Many individual investors follow investment recommendations without conducting their own analysis or evaluation.
15:30Relying too heavily on such advice often results in poor investment decisions and heavy losses.
15:39Blindly following others without considering their own investment goals and risk tolerance can lead to inappropriate decisions.
15:49Relying on expert opinions without independent analysis can also cause them to get swept up in market fads and emotions,
15:56resulting in outcomes far from what they expected.
16:01Ineffective investing often leads to losses.
16:04So individual investors should base their decisions on their own objectives and risk tolerance rather than following the crowd blindly.
16:14Although individual investors face many challenges in the stock market,
16:18with a scientific investment strategy and continuous self-improvement, they can still achieve profits.
16:25Relying on expert opinions without further ado,
16:26Below are some practical suggestions to help individual investors overcome these limitations and succeed.
16:33First,
16:34enhance your financial strength.
16:37Although individual investors cannot compare with large institutions,
16:42they can still strengthen their financial capacity through prudent capital management and gradual accumulation.
16:48Avoid using excessively high leverage,
16:52maintain a reasonable investment ratio and ensure the ability to control risks amid market fluctuations.
17:01Sound capital management will help maintain a stable portfolio
17:05and prevent losses in a single stock from undermining the entire investment strategy.
17:12By saving and investing regularly,
17:14investors can gradually boost their financial strength and improve their competitiveness in the market.
17:20Second,
17:22pursue a long-term investment strategy and reduce trading frequency.
17:28Individual investors should develop a long-term investment mindset,
17:32reduce short-term trades,
17:34and hold stocks for longer periods.
17:38Holding quality stocks over an extended period
17:41not only helps achieve sustainable financial growth,
17:44but also allows investors to fully benefit from the company's development potential.
17:51This way,
17:52they can enjoy the steady increase in stock prices and dividends.
17:56Third,
17:57focus on high-potential stocks rather than spreading investments too thinly.
18:02Investors should concentrate their resources on standout stocks
18:06and avoid dispersing their assets into many unrelated stocks.
18:10Focusing investments on core stocks can optimise the use of capital and yield higher profits.
18:19Such stocks often attract significant market interest with strong cash flows and stable growth potential.
18:26Fourth,
18:27build and rigorously adhere to a scientific trading system.
18:32The trading system should be tailored to the investor's personality and investment style,
18:37while remaining simple to execute.
18:40This system should include clear rules for entry, exit, stop loss, and capital management,
18:47helping maintain discipline in trading and preventing decisions driven by emotions.
18:53Fifth,
18:54strengthen the analysis of fundamental factors in stocks.
18:59Investors need to focus on studying key fundamentals such as financial conditions,
19:04profitability,
19:05profitability,
19:05industry prospects,
19:06and competitive advantages to select quality stocks with long-term investment value.
19:13Thorough fundamental analysis increases the likelihood of success and ensures stability in investment strategies.
19:21Sixth,
19:22learn and master technical theories.
19:24Investors should take the time to study and familiarise themselves with technical theories such as Dow theory,
19:32trend analysis,
19:34or GAN rules.
19:35This knowledge helps them understand market movements better,
19:40thereby making more scientifically based investment decisions,
19:44finally,
19:45strictly implement a stop loss strategy.
19:47Cutting losses is a crucial tool for protecting one's investment capital.
19:55Investors need to set reasonable stop loss points and execute them decisively when stock prices fall below those levels.
20:03This approach safeguards capital, minimises risk, and maintains the overall safety of the portfolio.
20:12A stringent stop loss strategy can help investors stop losses in time when prices decline,
20:19preventing further deterioration while also playing an essential role in capital management
20:25by maintaining financial flexibility to seize new investment opportunities,
20:30improving psychological resilience and controlling emotions is also essential,
20:35as market fluctuations can easily unsettle investors and lead to rash decisions.
20:43Individual investors should enhance their ability to manage their emotions.
20:49Remain calm and rational and avoid letting emotions dictate their investment decisions.
20:56By strengthening mental resilience,
20:58investors can stay alert during market fluctuations
21:01and avoid impulsive trading driven by fear or greed.
21:06A calm and rational mindset is a crucial foundation for achieving long-term stable profits,
21:13diversifying risks and allocating assets reasonably is necessary as well.
21:19Although concentrated investments can yield high returns,
21:23they also come with greater risks.
21:25Individual investors should allocate assets based on their risk tolerance,
21:31diversify their investments,
21:33and ensure they are well prepared to face various market environments.
21:39Proper asset allocation helps maintain a stable portfolio
21:42while reducing the risk associated with single stocks.
21:48Moreover, by diversifying investments,
21:50investors can balance risks and returns across different stocks,
21:55leading to more stable overall profits,
21:58continuous learning and self-improvement are key factors.
22:03The stock market is constantly changing,
22:06and investors must continuously learn and improve themselves
22:09to keep up with the latest trends and effective investment strategies.
22:14Through ongoing education and practice,
22:18investors can enhance their skills and achieve long-term profits.
22:24Persistent learning and self-improvement enable investors to adapt to market changes,
22:30master new methods and strategies,
22:33and gradually increase their success rate,
22:36ultimately moving closer to financial freedom.
22:39Stock trading is not only a competition of techniques and strategies,
22:43but also a challenge of psychology and intellect.
22:48Individual investors face numerous difficulties in the stock market,
22:52yet with a scientific approach to investing and continuous self-improvement,
22:57they can still achieve profits.
23:00The key is to recognize one's own weaknesses,
23:03learn and master the essential investment knowledge,
23:06build a systematic trading strategy,
23:10strictly implement stop-loss measures,
23:13and maintain composure and rationality.
23:16Ultimately, investors will find their place in the stock market
23:20and achieve financial freedom.
23:24Always remember that the stock market carries inherent risks,
23:28so investments must be approached with caution.
23:31We hope that today's insights help you better understand
23:34the challenges faced by individual investors in the stock market
23:38and offer some practical solutions.
23:41Thank you for following and supporting our channel over the years.
23:46Goodbye and see you next time.