The stock market can be an intimidating place: it’s real money on the line, there’s an overwhelming amount of information to follow, and people have lost fortunes in it very quickly. But it’s also a place where investors (just like you and me) have long made A LOT of wealth.

The main reason for the difference of outcomes? Misconceptions. These lead people to make poor investment decisions and ultimately poor returns. 

So, Let’s Look At SIX Stock Market TRUTHS:

The long game always wins!
There’s nothing the stock market hasn’t overcome. “Over the long term, the stock market news will be good,” said billionaire investor Warren Buffett, the greatest investor in history. In the 20th century, the United States endured two world wars; the Depression; a dozen or so recessions; oil shocks; a flu epidemic; and the resignation of a disgraced president, yet the stock market still rose significantly. The odds of positive returns improve as you lengthen your time horizon

Don’t ever expect average
At some point in your life, you probably heard that the stock market generates about 10% annual returns on average.

While that may be true in the long run, the market rarely delivers an average return every given year.

The sky’s the limit
A stock can only go down by 100%, but there’s no limit to how many times that value can multiply going up.

Yes, we’ve seen some pretty bad sell-offs in the stock market. But it’s gone up many more times. It’s not guaranteed, but it’s possible

Earnings drive stock prices
Any long term move in a stock can ultimately be explained by the underlying company’s earnings, expectations for earnings, and uncertainty about those expectations for earnings.

There will always be something to worry about
Investing in stocks is risky, which is why the returns can be so high.

Even in the most favorable market conditions, there will always be something to worry about.

The stock market is and isn’t the economy
While the U.S. stock market’s performance is closely tied to the trajectory of the U.S. economy, they’re not the same thing. 

The economy reflects all of the business being conducted in the U.S. while the market reflects the performance of the biggest companie

SO, what does all of this mean?
There are way more people who want things to be better, not worse. And that demand incentivizes entrepreneurs and businesses to develop better goods and services.

And the winners in this process get bigger as revenue grows. Some even get big enough to get listed in the stock market. As revenue grows, so do earnings....And earnings drive stock prices!