Five Stock Market Secrets You Need to Know

Published: 4 years ago, Last Updated: 5 months ago
Daniel Brown
Writer: Daniel Brown
Jackson Rhodes
Reviewer: Jackson Rhodes
Listen minutes

Do you want to become a Wall Street whiz or a shrewd investor with a solid strategy for navigating the markets? There’s no doubt that enjoying profitable shares of Twitter as you munch on your breakfast without lifting a finger is an ideal scenario, but that is seldom the case. Like anything, it takes work, a trader’s mindset, and some know-how to manage the risks and to be successful.

Whether you are a stock market enthusiast or just looking to get into the game, seeking the help of a financial advisor is a common move. With a financial advisor’s help, you can infiltrate the market and get to know the ins and outs of its workings. However, advisors often refrain from indulging a little extra information about the market, including valuable strategies and insights.

Below are five stock market secrets that financial advisors sometimes try to keep from their customers. Keep in mind that these ideas are not all there is to know and won’t guarantee 100% success. Still, they are the start of a long journey. A journey filled with learning market analysis, gauging trends, and understanding the anatomy of various trading markets as an investor.

Top 5 Secrets of the Stock Market

While this isn’t a comprehensive list of all the secrets, here are a few strategies that financial advisors don’t disclose:

1. Use Index Funds

An index fund is a collection of stocks or bonds created with the sole purpose of simulating the structure and performance of a financial market index. These funds sustain lower expenses and fees than actively regulated funds. They support a yielding investment plan. Some keynotes to pay attention to while deciding on mutual funds to invest in are:

  • Low Expenses. Investors are always keen on choosing the best low-cost funds on the market without any commission or sales charge.
  • Diversification. Investors are shrewd enough to protect their interests from the climaxes of the bear market by keeping their portfolios fairly diversified between stocks, bonds, and cash.
  • Defensive Sectors. Defensive sectors such as health care and consumer staples are parts of the market that can hold up better during times of hardship and a weak economy.

With that being said, the main criteria for investors will always remain the stock’s expense. It is fundamentally important to keep fees low to produce high returns in the long run. This is a part of the strategy that every trader must adopt. So the question is: why pay extra for the same bundle of stocks when you can profit from high yields with lower costs?

2. Stocks May Not Be Safe for the Long Term

When analyzing the stock market’s flow through charts and graphs over lengthier periods, we realize that the market may increase or decrease by 50% in one year, and consequently, your return may fluctuate over 20 years.

Dynamic charts of the stock market

Although these numbers may seem appealing, what advisors won’t tell you is that stocks may not always ensure better yield from other alternatives over 20 years. Maybe stocks won’t “waste” your money per se, but that doesn’t indicate a surefire return on your investment.

3. Always Pre-pay Your Debts

Advisors who charge a percentage of your assets will want your investment portfolio to be as extensive as possible. That is because operating a widely diverse and large stock collection will ensure big bucks for them. Your financial advisor may encourage you to keep your money tied up in the stock market, under their control, instead of paying off your ongoing debt.

It may often be more sensible to repay your debt by forgoing any further interest and fees rather than binding your cash to one specific investment. However, this all depends on several risk management factors, investment allocation, the term of your loan, and the borrowed amount’s interest rate.

4. There are More Options to Diversify Your Retirement Income

For some, the stock market has the potential to be a fruitful investment path. With that said, stocks are not the only method for making money. Safer options, such as rental property, may provide a more relaxed and guaranteed return. Rental properties are a different type of investment than the stock market, and they hold their myriad of challenges. 

Saving coins for retirement fund with clock

Just as you should diversify your stock market portfolio with a collection of diverse stocks and bonds, you should also be doing so with your attempts to supplement an early retirement income plan. From rental properties to part-time gigs or small business enterprises, financial advisors often omit to inform you about your various revenue opportunities.

 A financial advisor charging a percentage of profit from your assets may not notify you about this because it is much more profitable for them to keep your cash confined to the stock market.

5. Do Your Own Research

While some investors might think they hold the sixth sense for locating good companies, it doesn’t hurt to take matters into your own hands every once in a while. When you’re thinking about undertaking as daunting a task as piercing the stock market, it’s essential to do your stock research

Woman researching stock market secrets on laptop with notebook

While planning to allocate your hard-earned cash to stock, you will need to prioritize shrewd research to determine whether the company is generating enough profit, maintaining a healthy cash flow, and keeping its customers satisfied. You can do this by reviewing the stock’s financial reports, which will, in turn, help you to make a well-educated decision regarding your investment. Whether you are looking to break into the stock market or merely read up about their constant fluctuations, here are a few of the essential stock market websites to visit during your research: 

  • The Motley Fool
  • Yahoo
  • MetaStock

As Warren Buffet said: “Success in investing doesn’t correlate with IQ … What you need is the temperament to control the urges that get other people into trouble when investing.” So, make sure to check your emotions at the door before you embark on the marvelously strenuous world of stock market adventures. Keep the mindset of a seasoned trader, working with techniques and strategies learned from your analysis of the markets.

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