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WHY WE LOVE THE STOCK MARKET (AND YOU SHOULD, TOO!)

Stock Market | Published on Jun 23rd 2016 | Comment(s) 0
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The stock market is erratic, unpredictable and downright crazy at times. Admit it, if it were not, you would not love it and as a matter of fact we would not either. We humans find pleasure in seeking the unknown. The thrill of an adventure invigorates us and we unconsciously run after it no matter what. If the stock market was a stable place, it would be pretty boring after a while. There would not be any exciting stories about getting valuable stocks at low prices or selling a particular stock right before its price started plummeting. Of course, it’s fun as long as you can make money, losing money is never a fun affair, but nevertheless in the stock market you win some and you lose some.

The stock market rides heavily on emotions, be it fear, paranoia, happiness or euphoria. When people fear that prices of a certain stock will fall, they start selling in a panic, which causes other traders to sell as well. In turn there is widespread panic. Similarly when a stock performs well everybody wants a piece of that company and starts buying that stock, pushing its price up even more.

In the short run, the stock market is an experiment of human behavior and emotions while in the long run, the stock market helps you track fundamentals like company earnings, dividends and economical change. If for a moment you take away money from the equation, the stock market will seem like an extremely fascinating system. Then again, if there was no money in the system, it would not matter anymore.

The very reason why you should love the market is the way it functions. It is a collective of different opinions that are always at odds with one another. There are buyers and there are sellers and the market provides capital for companies. However the integral part of the market is understanding the psychology of every trader and that itself is fascinating.

A few reasons to love the stock market:

#1: The rise of Sensex

The BSE Sensex has jumped points innumerable times since 1979 to reach where it is now. There were a large number of companies whose stocks rose 100-fold between 1994 and 2004 but some fizzled out while some stayed. However, the most important fact that makes us love the stock market even more is the fact that in the long run it is an extremely profitable venture. Armed with common sense and patience, when the time is right, your investments will flourish and give you enormous profits.

#2: Save Tax on Long Term Capital Gains

According to the Income Tax Act in India, under Section 54F, it is stated that exemption is available on long term capital gain on sale of any asset other than a house property, and this includes stocks as well. So you will be saving tax money if you invest your money in stocks for the long term and earn a huge profit. You will not have to part with your profit much for tax. Saving money is always beneficial.

#3 Stocks are Liquid

Another fascinating thing that makes us love the stock market even more is the fact that all stocks are liquid in nature. You can buy stocks at any time given that you have the necessary funds to buy it. Similarly you can sell off the stocks that you own at any point of time without any hassle at all, and you get back money from the sale that instant. This liquid nature of stocks often makes it a brilliant choice for investment.

By now, we are sure that you too have fallen in love with the stock market!




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