5 Huge Mistakes Stock Market Beginners Are Making

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Five huge mistakes i see beginners in the stock market make every single year if you are newer to the stock market meaning you’re in your first year of investing okay maybe you’ve been looking in the stock market for a few weeks a few months or whatever you’ve been in the markets for less than a year there’s a good chance you’re probably gonna make at least one of

These mistakes and i’m here to present this video for you guys here today that hopefully you do not make any these mistakes because you watch this video and i hope it helps you out and whatnot now i made some of these mistakes and almost every single investors gets caught into at least one of these and these these things can waste so much of your time your energy

In your money and if you get caught into them guys so i hope you enjoy this hope you get a ton of value out of it make sure you follow me on instagram and snapchat my links are down there in the description let’s get into this guys the first one the first one is buying a stock just because someone else you heard is buying that same company just because someone else

Believes in the company this never means you should buy those shares i don’t care how much you respect them i don’t care how much money they have i don’t care how much success they’ve had in the past you should never ever ever buy a company just because someone you might look up to is also buying that company okay now it is fine if you hear a stock you hear a stock

Idea from whoever your neighbor your dad the guy online me you know warren buffett or a carl icahn or whoever it is you hear a stock idea and then you’re like hmm no one seems kind of interesting i’m gonna look further into that that’s okay and then if you win invest and you looked into the company and what none you really liked it that’s fine you you get my blessing

On that i do that all the time i’ll hear someone else mentioned name and most of the time 99% of time their names i’m not interested at all even looking into sometimes i look into them and they don’t even really get past like a 1 hour mark and that just happens but the majority of my investments the idea came from somewhere like maybe i read an article online about

This stock and i’m like all i need to look into that maybe i’m watching tv one day on cnbc or bloomberg or i see something on a cnbc app or i’m on the stock tracker up somehow that idea came to me right it’s not like i just sat in my room and i just like like thought forever oh let me thirst think of a magical stock here i had to hear an idea from some bar maybe

Somebody mentions a sock in a comment right maybe someone mentions in my stock market group the idea has to come from somewhere right but there are two real reasons why you don’t ever want to just buy a stock just because someone else is okay the first one’s obvious like they could get it wrong okay it doesn’t matter who it is they can then get that stock wrong

So if you buy stock a b and c and that happens to be one of them they’re wrong on you’re gonna lose money okay that’s the very very obvious thing the second part is so much bigger than that though the reason someone gets into the stock market other than obviously wanting to make their money into money right the biggest reason if someone gets into the stock market

Because they want to have financial freedom they want to start taking control of their life okay as an individual stock picker you are starting to take control of your financial life right so many people are so dependent on their job right they they lose their job they’re screwed like like they have to go find another one immediately and try to look around for that

And most people don’t invest their own money they just stick it in a 401k whatever money they can put away right and it’s invested automatically for them by some fund manager or something like that right so they have really no control of their financial life at all okay when you start individual stock picking you you begin to start taking control your financial

Life where you start making decisions in your life hmm i like company a b and c i like this company over here i like this company over here i like these five seven companies over here i’m gonna stick money in these you start taking control of your financial life and it begins to get you in a mindset shift completely okay now when you’re just investing just because

You’re someone else you heard you’re still not taking control of your financial life you do not take control your financial life until you start making your own decisions okay and until you start being your own man your own woman out there until you start making decisions for yourself you’re not really financially free this is the first step so you don’t ever want

To just buy a stock because someone else does guys this is number one let’s get into number two number two has to do with making sure you fully understand that you are not gonna make money on every single stock you invest in this is so key guys when you when i used to think when i was just getting start in the game i would make money every single time okay it’s

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Just not accurate guys you’re never gonna make money 100% of the time over the long term are there some years where maybe you just knock it out of the park in every single one of your investments goes great absolutely but there’s gonna be a time if not multiple times when you actually you know lose some money okay so what i like to look at is i looked there’s a

Sport called basketball okay and basically if you get fouled or whatnot you shoot free throws and what i have found is the same exact statistics that go into shooting free throws are the same things that actually go into stock market investors as far as success goes so if you are a great free throw shooter if you shoot a hundred free throws in a game you should

Make at least 90 of those it’s the same exact ratio as far as a successful investing if you are a truly great investor if you invest in a hundred stocks over a ten year span at least 90 of those stocks should have made you money okay the game is is totally rigged in your favor and the stock market is totally rigged in your favor over the long term okay oh we can

Get into that just a little bit if you are a good free-throw shooter you eighty percent plus of your shots or made okay it’s same deal in the stock market if you get at least eighty percent plus of your stocks are successful and you make money on them you’re good you’re good at the stock market and then if your average is somewhere between seventy and seventy nine

Percent of the time your stocks are correct so if you invest in a hundred stocks over a ten-year span at least seventy to seventy nine of those should have been a success all right no anything less than seventy percent you’re really garbage okay you there’s there there are either one of two problems one is it could be just your strategy is really really bad okay

So if you invest in a hundred stocks over a 10-year span in only 65 of those make money only 50 of those make money especially if you lost money more than you gain either your strategy is horrible or you’re not putting in the work ethic or you’ve got both problems going right where you have horrible you know strategy and you’re not putting the right work ethic same

Deal with free-throw shooters right some of them have horrible you know technique and what none they never make their free throws and they missed more than 70% of the time and usually those same exact ones they usually never put in the work i think to become a great free-throw shooter okay so why is the game rigged in your favor well one the government is totally on

Your side okay the government wants the stock market to go up more the government wants companies to be more profitable okay the government wants you know companies to be able to compete internationally and things like that so we’re gonna do things you know whether it be a corporate tax reform whether it be you know lowering interest rates whatever it takes to keep

The economy solid to keep these corporations going up and most people have having you know tons of their life savings in the stock market so one day they would like to retire right the stock market goes up generally speaking they can retire and do things like that and spend more money and whatnot so the whole game is rigged in your favor also you’ve got you know

Very bright executives on almost every big company out there right who are daily are trying to think how can we make more profit how can we expand in this category how can we do this with that the whole game is really rigged in your favor completely that’s why if you can get it at right at least seventy percent of time like like your strategy is re the really bad

Or you know ultimately at the end of the day like you just might not be working hard enough and once again you’ve got to judge over the long term especially if you’re a long-term investor so if one year so if one year goes by and you invest into let’s say ten stocks and not you know and not at least seven of them went up that’s one year you’re a long-term investor

Why you judging off of one year you should be judging off from you know three five you know seven years whatever there so that’s number two is getting number three the number three mistake beginners in a stock market make and i made this mistake in my first year is looking at dividend yields okay looking at the dividend yield and thinking like you should make it an

Investment based upon what a dividend yield is so if you see a 2% or 3% or 4% yield loss and you’re like this this company pays a 4% dividend yield if i got 100 bucks invested in this company i can make $4 this year it’s just for having my money in it and so a few things one is just because the company has paid dividends to i mean it’s guaranteed to pay it in the

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Future okay they could cook that dividend now most bigger company days you they usually don’t cut dividends they usually keep them going unless maybe we go into a recession or something like that usually they keep that dividend okay but it’s possible they could cut it but also there’s no point in just looking at the dividend ratio i’m thinking that’s gonna help

You be a successful investor what not that should mean absolutely nothing to you because okay you invest in this stock it pays you have four percent in dividends awesome okay so you had you know let’s say a thousand dollars invested you get 40 bucks in dividends from that cool well well what if that stock has a bad year though in the stock price depreciates 20

Percent how bright of an investment was that it is really not as simple as it is just like oh let me look at the dividend ratio and go from there that’s not how it works guys last year last year the stock market went up somewhere around 25 26 percent okay the average dividend paid out there was probably somewhere around a 2% yield what what mattered more if you

Were in a stock that went up 40 50 60 100 percent last year or the dividend yield you got that was a 2% yield or something on on a ge stock or whatever that actually went down last year like you’ve got to think about this guy’s dividend yield don’t get caught up into that too much it’s more about how much your company appreciates over time how much more valuable

The shares get and that’s you know based upon what revenue growth is in the future people based you know what the company is doing in the future by revenue growth in the future expect it you know what the total sector they are in is going to do in the future is that going to grow in the future and then also what’s that forward p/e at is a super high already maybe

It’s already overvalued at that point is it low maybe there’s some opportunity there especially if there’s growth so don’t get caught up in the whole with this one pays a three percent yield or five percent yield and this is what i need it’s not it’s not really where your focus should be your focus should be on making business decisions on investing in stocks not

Oh this one pays a two percent yield let’s get into number four number four this one oh my goodness i see this so often from newer people in the stock market people that are within their first year of investing it is getting so caught up into day to day price fluctuations in stocks you should not be getting too caught up into oh my gosh stocks went down 2% today

Stocks went up 2% today whatever like that should not matter whatever’s going on that day to day you know fluctuations and prices it should not matter now last year for people that just you know got started in stock market last year they kind of got started in a really bad year in my opinion was a good year and bad year obviously the markets did phenomenal but

From a psychological perspective they came into a market that was just pretty much going up and was very you know even and whatnot there wasn’t a ton of volatility now this year so far we’ve had a lot of volatility especially here in february right the markets have been moving all over the place pretty much day in and day out we’re seeing 300 400 500 point moves

Sometimes even 1500 point moves right so there’s a huge you know the the picture of the ocean you know the ocean goes up and down that’s really what the stock market is okay so you’ve got to expect that if you go on the ocean with a boat you better expect that that boat is gonna be rocking up and down especially if you’re in a storm right same deal with the stock

Market you cannot get caught up into oh my gosh that you know the stock market went down or up all that’s just mumbo-jumbo you need to be making business decisions on investing in stocks in thinking several years out where is this company gonna be three four or five years from now i don’t care if i buy stock a b and c for $10 a share tomorrow okay i don’t care what

That stocks at one week from now i don’t even care what it’s at one month from now okay maybe i care in the respect that i might buy some more shares if it goes lower or whatnot or sell-off if it went up massively but for the most part i don’t really care where those shares are at talk to me in three or four years that is when i really care where those shares are

At so whether those ten dollar shares i bought went down to nine dollars went up to eleven dollars went to twelve dollars eight dollars i don’t really care all i want to know is three years from now where those chair is that or they have $20 $30 $40 or that or they have $5 that’s really what i’m gonna know at the end of the day and that’s really what i cared about

Don’t get caught up in all this price fluctuation it’s gonna it distract you from where your mind needs to be and your mind needs to be on looking into companies for the long term not oh my gosh this one dropped up percent today or two percent or five percent or whatever guys so keep that in mind let’s get into the last one number five this one number five is

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Really not just a mistake i see beginners in the stock market make i see experienced investors make this all the time so whether you’re watching us and your newest market or experience i see this all the time and it is truly people not caring about the balance sheet people that just don’t care about the balance sheet and in most market situations the balance sheet

Isn’t gonna be incredibly important okay the balance sheet kind of gets forgotten about the balance sheet basically for those who do not know what about you this by the way they got video on what a balance sheet is and whatnot and think of it in the simplest terms the balance sheet of a company think about it as a balance sheet of your life the balance sheet of

Your personal life is how many assets do you have how many liabilities do you have how much cash do you have how much you know if money do you have in your savings account how much money do you have in your stock market accounts how is you do own a home things like that and then what are your liabilities you know do you have debts and things like that it’s the same

Exact idea but for a company it’s gonna be what do they have for assets what do they have for liabilities you really need to be paying attention to the cash category you really need to be paying attention to what they have in short term investments long term investments and then you really need to be paying attention to what that company has in short term debt and

Long term debt okay by looking at those you can get a pretty good idea of where that company’s financial base is okay meaning if that company comes upon hard times or we have an economic troubles okay we have economic troubles we’ve gone into recession scenario what is it likelihood that that company is gonna get through that and not go out of business okay or you

Know with some price protection there a lot of people lost a lot of money in the 2008-2009 stock market crash in recession right because they were in companies that had poor balance sheets and some people weren’t hurt nearly as bad in the recession that were in the markets because they were in companies that had phenomenal balance sheets you getting companies that

Have weak balance sheets and when something goes wrong with that company and sometimes you’re gonna get in a company if something goes wrong with things are gonna go really bad for that investment the only reason my worst investment ever in my life as far as one particular stock goes was gopro they messed up across the board they made so many mistakes we don’t have

To get into they messed up everything everything they could have messed up they messed it up okay this company the only reason i was able to sell out my shares at like six dollars and 50 cents a share rather than 50 cents a share or nothing sure is literally because that company had a great balance shoot so when i went into that investment i looked at the balance

Sheet i looked at everything i thought it was gonna work out but lucky enough i cared about the balance sheet in the head of a ton of money in cash they had a ton of money in investments and at that time they had no debts so they were able to get through all these troubles and whatnot and i was able to sell out somewhat of a reasonable rate rather than lose all

My money that i had invested in that one guys and people lose all their money and some of these stocks they mess around with that you know don’t have a great balance sheet the next thing you know they’re having to sell out for bankruptcy type traces and that hurts really bad guys you never want to lose that much capital you’re going to lose some capital once in a

While but you don’t want it to be so extreme that you know one of your bigger investments went bankrupt or something like that that’s a horrible situation a lot of people a lot of people got caught up into that in the 2008-2009 recession and a ton more people are gonna get caught up into that in the next time we have a big recession which who knows when it’s gonna

Be but when we do i can guarantee you what a lot of people are gonna lose the majority of their money if not all their money because they’re gonna be in some of these companies that have really poor balance sheets those companies going to go under in a very rapid amount of time and it’s not gonna be a good situation for them at all guys so make sure you’re always

Paying attention that balance sheet anyways i hope you guys enjoyed this tremendously today make sure you follow me on instagram or snapchat links down there in the description anyways thank you for watching guys and have a great day

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5 Huge Mistakes Stock Market Beginners Are Making By Financial Education

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