How to lose money in the stock market?

How to lose money? I must be kidding. How To Make Money In The Stock Market is exactly the other side of the coin. Who wants to lose money in life, I mean anyway and in any form? But if you continue reading you are serious about making money. After all, everyone wants to know the answer to this big-great question: How to make money in the stock market?

If you know how to lose money in the stock market, you will actually know how NOT to lose money. In fact, knowing how to lose money will protect you from bad days and teach you how to make money in the stock market. This old and simple story tells a lot about emotional discipline. After all, investing is more about discipline combined with knowledge.

There was a farmer. Once a Monk came to his place. The farmer and his wife served him well. When the Monk started leaving, he was pleased and gave the farmer a hen that lays golden eggs.

The farmer became very rich by getting one golden egg every day. His wife was always greedy. She always used to think that only one egg is found every day. Why not tear the stomach of the hen and take out all the eggs.

One day the farmer woke up in the morning and beat his forehead. The chicken was lying dead in the courtyard outside, the stomach was torn.

Since then there was neither a chicken nor an egg. The farmer and his wife lost the chicken of golden eggs.

How to Lose money Vs How to make money

The story is old but it has a lesson to teach. People lose money like this in the stock market. I often see questions keep coming up from people every day:

How can you double your money overnight?

How to make millions in three years in the stock market?

If you want to lose money, then dream of becoming rich overnight and tear the stomach of the chicken. And if you want to earn money, then keep the chicken and enjoy an egg every day.

Here is my similar experience with investing. I ruined a good portfolio due to greed for making money in haste. I did buy and sell for a profit for some time. This caused a serious fall in portfolio value and it fell to a quarter of its value in less than a year. I was seriously thinking about quitting when I realized my mistake. I made an excel sheet to calculate how much I made by doing this. The result shocked me. The annualized return on investment was 16%. This was enough to rethink my decision of quitting. This helped a lot in my decision to the journey of financial freedom.

A redesigned portfolio is still making profit, slowly. Now, that portfolio is growing with good-performing stocks.