Unlike rules in the engineering disciplines that may stay true years after we left colleges, there is no universal rule in security valuation. Market values of stocks are influenced by too many factors.
However, to “Man on the street”, he always believe, to the contrary, it is easy to make money. He is ill-equipped and unprepared. He take advises from brokers and dealers, and traded as instructed. If he loses, he loses so quickly that he believe he can recover from it just as fast.
It is almost impossible to beat the market consistently, even by the professional, but “Man on the street” believes that nothing is as easy to making money from the stock market. He is destined to lose.
If so, why should we still invest in stock market? Stock market provides unparalleled liquidity and frequent valuation of the stock. At low cost, one can quickly realised profit or cut loss. It is the virtue of a stock market. We should learn to avoid pitfall and wishful thinking, and take advantages of what the market mechanism has to offer.
At the end, the author asserts,
“Therefore, the more one learns about them, the more chance he has to preserve something. It is like anything else in life. Only a few amass fortunes. Only a few become really competent professional man or achieve real success in any line of endeavor.”
Quick link to The Battle for Investment Survival by Gerald M. Loeb