| The greatest stock market myth is the idea that | | | | where you hold house odds.Still not |
| investing in stocks is a form of gambling!The | | | | convinced?Maybe you're saying to yourself that |
| financial markets are often compared to a casino. | | | | just because corporate earnings rise in most |
| Put some money on X stock and you might as | | | | years doesn't mean there aren't years in which |
| well be playing craps!If that's your impression, and | | | | they fall. True enough. But over the last 200 |
| it's keeping you out of the markets, consider this: | | | | years, business profits have increased in far more |
| If investing is organized gambling, it's one of the | | | | years than they have decreased. And that's |
| rare kinds where the odds are stacked in your | | | | because the economies in the developed countries |
| favor!Why is that?Corporate profits are the key | | | | have expanded at a fairly steady pace with only |
| to understanding the investor's edge. By buying a | | | | several occasional setbacks from recessions.And |
| share of stock gives its holder an ownership claim | | | | that means stockholders with a good mix of |
| on that company's earnings. If those earnings go | | | | companies are more likely than not to make |
| up, then the stock price will usually rise as well. | | | | money!Gambling just transfers money from a |
| Makes sense, doesn't it? Ownership of a company | | | | loser to a winner because it produces nothing ... |
| that has higher earnings should be worth more | | | | excluding the severe doses of adrenaline!On the |
| than ownership of a company that earns less.An | | | | other hand, investing increases overall wealth |
| investment in the stock market comes down to | | | | because the capital invested in stocks provides |
| this: It's a "bet" that corporate profits will rise! | | | | the initial funding for firms, which exist for the |
| Based on the historical evidence, it's a pretty good | | | | purpose to producing goods and services. |
| wager! Not a guarantee by any means, but one | | | | |