Shares/Stock Reasons Why You Might Make a Loss on Stock Market

[Mika]

There are numerous reasons why you might make a loss in the stock market. Here are some common reasons:

Recession: When there is a recession, stock prices begin to fall because businesses start making losses, or earning less profit.

Inflation: When there is inflation, prices of raw materials increase, and interest on loans increases, which increases the production cost, which will increase running costs, thus businesses will not make s much money as they used to. Therefore, the stock market will fall.

Market manipulation: You might have heard of the term whales. These are people who buy a lot of stocks, and then start selling all of sudden. When they buy stocks, the price begins to improve and then they sell, take profits, and move on.

Panic selling: Panic selling means investors start selling stocks when they suspect the market is going to crash. This will even further decrease the stock price, and the investors will make a loss in the stock market.

 

[Jasmine]

The rule of the thumb is you don’t make a loss in the stock market unless you sell your stocks when the market is down. If you continue to hold onto your investment portfolio, you never make a loss on stock market. The only exception to this is if the company you invested goes bankrupt. If the company you have invested through stock market becomes bankrupt, the value of stocks will become zero, there will be no buyer for those stocks and you lose your entire funds. However, things like this one are exception. Normally, stock market goes up and down frequently and only those who are long term investors, will be making profits in the long run. Warren Buffet says, “You need to invest in the stock market with an assumption that the market is going to close tomorrow.” This indicates that you should not expect to make quick bucks from your stock investment.