Since I started this blog in 2011, I have a different definition in my mind on how to invest in the stock market. As I grew older, that definition has changed over the years. I used to tell myself that the stock market is where we go and get rich. But that is far from the truth, I realized.
The Stock Market is the business of banks and participating in that business means to treat it as business too. Treating the stock market as a place in which you buy inventories for your fictional store like a sari sari store. And banks are considered the malls in the scale of things.
You buy a stock to put inventory to your store. And sell it to other store owners or banks to make profit. In other words, its just a market where people buy and sell shares of a company. You may or may not profit from the deal.
When people think that the stock market is where they go to get rich. They don't run the show like a business. In a small sari sari store, the inventory you sell, you want a little profit margin and will not sell those inventory to anyone if they don't have the money. But an inexperienced investor is willing to sell at a loss, just to cut losses. He did not research enough to know if the stock is in demand or not. If you run a sari sari store like that, you will go bankrupt in the future. Imagine a store owner not buying the most needed goods in a community and spends his money buying things that are needed by the community. Money will get stuck in those inventory and he might sell it at a loss to get the money back.
So investing in the stock market, first and foremost, is about knowing and predicting the future in which people would be most likely need a stock. Its forecasting if people would most likely want a particular stock in the near future and accumulating that stock as soon as you realize this.
Its like buying fireworks 4 months early in anticipation of new year to sell and make profit.
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