Why should you NOT invest in stocks?

Investing in stocks is one of many options for investing your money. Although highly popular, it does come with substantial risk, especially in the short term. That’s why most people invest in stocks by opening an account with a brokerage – today.  And different brokerages have different strengths and weaknesses.

Also, investing all of your money stocks of several or a single corporation is very risky: You can quickly lose most of your money, but it you can also get vast returns.

Even if the general perception is one of huge potential for stock trading, we’ll let you know the harsh reality of stock trading and why you should think twice before you take the leap.

 

There’s a reason why buying stocks is so easy.

Seriously, there is almost zero barrier to entry for people who want to trade stocks.

First you open a brokerage account, there’s:

  • Charles Schwab
  • eTrade
  • Interactive Brokers
  • And about a dozen other companies you can choose from.

You link your bank account to your brokerage account and once you have some money in there, you’re ready to dive right in.

You can buy and sell stocks, immediately and just with a couple clicks.

But think about it… Why is this so? Well, that’s how the brokerages want it so they can keep making money off of every trade.

Yes, you heard right! They’re not making money off of stocks… they’re making money off of you trading stocks; and it doesn’t matter if you actually profit or not.

The information to buy stocks is NOT hard to get.

Contrary to common belief you don’t need special access to assess a stock’s information. There are all kinds of free websites that you can go to and find out about different stocks and their companies, such as:

  • Yahoo! Finance.
  • Google.
  • Bloomberg.

With any these websites you can:

  • Look at all of their valuations
  • Review their financials
  • Read what analysts think about certain stocks.

Again, this is all free accessible information. This translates to: You don’t get an advantage over other investors.

Even if you do more research than someone else, or stay up later at night, at the end of the day the information you are reviewing is not a secret, everyone else can see the same thing you do and some of the best avenues out there involve a level of secrecy…

If you can invest in things where you have an advantage, you’ll greatly improve your odds.

So, stay clear of the stock market, it’s almost impossible to have an advantage.

You can never win over HFTers.

HFT stands for ‘high frequency trading,’ and it’s exactly what it sounds like: Trades that are executed in fractions of a second with each trade making a tiny percentage.

Do this multiple times a day with a large sum of money and the profits can add up real quick.

But, HFTers basically front run the market by:

  • Physically moved their operations to be right next to a stock exchange to get a fastest reception time for the trade information.
  • And by seeing big trades going through from regular investors, and then trade in the short amount of time in between the normal trade.

You want to compete against those guys?

Since you’re an outsider, you’ll never know what is going on in the company you’re backing.

Even though it is a requirement that all companies that listed on public exchanges disclose their financials and internal business:

  • Much of that information is significantly delayed
  • And their accounting is not consistent with other companies, since they use non-GAAP accounting.

Additionally, of all the stocks that you hold, can you call up the CEO of any one of those companies? Probably not, just like 99.999% of the other stock holders.

You will always be a follower and never an innovator.

Since investing in stocks is done through form 13F -a filing with the SEC that institutional investment managers with over $100 million in qualifying assets must submit- and it’s publicly available, you literally get to look inside of other big investors’ portfolio.

However, there’s a problem…  You may think that you’re copying a great strategy -but since the forms can get delayed for months- in reality, you’re buying a stock over its prime.

Other downsides

You may think that these reasons we just listed cover about all the negative aspects of stock trading, but the fact is that you’ll still have to deal with nuisances such as:

Incorrect portfolio diversification since all you’re doing is holding a bunch of different stocks in your brokerage account.

Without the proper advantage, a clear channel with the company you’re backing and access to the properly standardized financial information… you’ll essentially be gambling.

Is there a better option to make my money grow?

We’re talking about making money here, so don’t get me wrong, but investing in the stock market can be boring and stressful.

Therefore, of these options:

  1. Trade stocks while sitting in a dark room all day, staring at a computer screen to not really achieve a significant advantage, to always fall behind the trend and watch your sanity go away every time you see your screen go red.
  2. Get in the ground-floor of exciting and profitable opportunities which will net you significant profit and bragging rights by adding some real exposure to your portfolio

Tell me, which you would rather do?

Now… if you’ve made it this far it’s because you’re looking for something different and effective to make your money grow.

There is an opportunity in the Fintech sector that truly circumvent all the hurdles that stock trading represents for investors.

An avenue with:

  • Calculated risk.
  • A clear exit strategy.
  • A trillion dollars market
  • And yearly dividends

 

This is a serious chance to get on the ground-floor of an ambitious, solid, visionary and profitable project that will change the status quo of how finances and investing are done…

And you can find out more about it here!

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