The hardest thing about investing in stocks is letting go of your money. Let me explain.
When you invest your money into the market, you can’t control how the stock price will behave, and often it will go down. And the temptation is to sell when it does that. And that will mean you will “realize” your loss, which means the money you were losing before you sold your stock, called a “paper loss,” will become a real one if you sell your stock when it goes down from the price you bought it. So you will walk away with less money than you started with. No one wants that.
But it has happened to everyone; I’ve done it; even the pros have, too. But that needn’t happen to you. And it’s all about your approach.
If you approached buying stocks differently, you’d avoid realizing your losses and will even make gains. You can even get rich. And that means you need to understand that once you invest your money into a stock, you need to cease thinking about it as money to succeed.
You see, investing in stocks is about thinking less about your money and focusing more on your investments. Because to make more money in the stock market you can’t think about money. That will just make you lose it faster.
When you focus on your money when it’s invested in the market, especially in tech stocks, there’s volatility. A lot of it…boat loads of it. Those are the ups and downs a stock price will go through on any given day. You know, the ones that scare the crap out of you, that make you jump ship and sell before you ever intended to, the ones that make you feel like you’re going to lose all of your money if you keep holding on to that stock. Yeah, those.
Holding on when you get into a stock is especially hard when you first buy a stock and then it goes down, like, immediately after you buy-in. It feels awful. I know. I’ve been there—many times.
I bought Nvidia over a year ago, and it dropped by 50% or more over a month or two. So, at that point, I was thousands of dollars down. And believe me, I wanted to sell and realize my paper loses. It felt like everything inside of me was burning down. But I held on. I didn’t sell.
Instead, I waited.
If you buy a good or great company’s stock and it goes down, they will often go back up and continue to grow. That’s what great companies, especially the ones that are market leaders, which Nvidia was and is, do. Waiting and holding your stock position will help you avoid a loss even when you’re thousands of dollars down. And more importantly, eventually, you’ll gain.
To do that, you have to let go of your money. You need to stop thinking about your money as it is. Yes, it’s hard to see the ten thousand dollars you initially invested become five thousand when a stock price drops. And, yes, it does feel like someone just reached into your pocket and robbed you in broad daylight, while smiling at you. But, if you can short-circuit your brain and stop thinking about your money as money, you’ll begin to see something else. Something better.
You’ll start envisioning yourself as an owner. Because, really, that’s what buying a stock means. You own a small piece of a company. When I bought Nvidia’s stock, I owned a small piece of the world’s best chip designer. And sure, the stock fell out of favor right after I bought it. But when I wasn’t focusing on my money, and the imaginary guy’s hand in my pocket, I was able to focus on my investment. And I remembered why I bought it in the first place, which made it easier to hold on to the stock and wait. And I could see that the company was going to be ok and was able to remember that it was the market leader and the best at creating AI chips and would continue to innovate. Doing that helped me stop thinking about my 50% drop and realize I owned a piece of a world-class company.
After several months, Nvidia fully recovered to the original price I bought it at. Then it continued to go up, as did my net worth. I did sell it, unfortunately. That’s because it dipped during the covid scare earlier this year, which is when I sold it, to my chagrin. It was for a gain, but for far less than I would have if I held on. If I would have held on, instead of making a little bit of money, I could have more than doubled my money.
That’s the thing about making money in the market. When you think less about your money, the more of it you often make.
Now, I’m not saying that every stock will recover or will be a winner. And, I’m not saying that everyone can get rich investing. I am saying that you need to do your homework and need to invest in the best companies you can find. And if you do, and hold on, your chances of growing your wealth is much greater, than if you don’t.
You see, you don’t become rich by thinking about money. No. You do it by thinking like an owner.