How Do You Make Money in the Stock Market?

Many people you talk to will tell you that they made money in the stock market last week, but did they really? You see, the price of a stock of any company is intrinsic, and the money is not realized unless the stock is sold. So, even someone who is making money doesn’t actually make anything, unless they take it off the table by selling it at a profit from what they bought it at.

The same person might tell you that they made money because they bought low and so, someone else lost money. But that may not be the case at all. The other party might have bought the stock when it first came out, it may have split three times and grown each time by a large multiple, so that person might have made ungodly amounts of money, much more than the new person who bought that same symbol last week will ever hope to make.

Just because one person makes money, does not mean someone else lost money, and this is something that you need to comprehend, as the stock market is not a zero-sum-game, but I understand why human beings see it this way. You must observe the market in a different way, think of it as ocean waves coming in towards a cliff from where you are observing it.

“Buy low and sell high”

Not long ago, I mentioned this to Guang Wu, the author of a new book; “China: Has the Last Opportunity Passed by!?” and we discussed the new Chinese stock market investor and how that was indeed changing the game in China, allowing many stocks on the Shanghai Composite to trade at 80-100 times earnings, although there has been a little bit of give back, they sure have run that market up. Please consider all this.

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