Statistics show that 90% of investors in the stock market lose money. There are many reasons why so many investors lose money.  

Short term investors

Short term day traders buy and sell stocks without knowing their profit growth prospects. They just want to take the chance or risk to make money. If they trade so often, they will lose money because of transaction fee.

Even if they adjust your approach and mindset, there will be occasional losses due to the economy or market shifts.

Not Doing Any Research

There are tons of online articles, supposed “finance gurus,” investing newsletters, and even friends or family all touting the latest stock or fund you should be investing in. There are even websites like Morningstar that rate various funds and stocks. 

Too often though, people blindly follow these recommendations or advice without researching themselves. I know reading a stock or fund prospectus can make your eyes glaze over, but they aren’t too hard once you know what to look for. 

Many of these writers of “recommendations” might be paid for by the companies to promote their stocks.

Other recommendations might be based on the writers’ holdings; they have invested a lot of their own money and they want more investors to buy to push up the share prices.   

Trying to Get Rich Quick

People lose money in the stock market because they think and assume investing is their ticket to getting rich quick.

If you’ve done research online about investing, you certainly have come across the wealthy day traders or penny stock traders. 

They show off money, fancy cars, or lavish traveling, and you think it is easy money. But 99% of the time, you’ll lose money following and trying to emulate them. 

This is what happens when investors try to outsmart the stock market with constant buying and selling to make fast profits.

Ignore the get rich quick pitches or the “must have” investments, you should be focused on your long-term investment growth. 

Unforeseen surprises

Many investors can lose money due to unforeseen surprises. Let me give you a good example.

At the beginning of the year, crude palm oil price shot up to historical high, above Rm 7,500 per ton as shown by the CPO price chart below:

Many investors with good foresight rushed to buy Jaya Tiasa, Subur Tiasa and other plantation stocks. All plantation stocks reported reduced profit at the end of May for the quarter ending March. All plantation stock prices plunged rapidly. The reason why plantation companies reported reduced profit was due to Covid 19 pandemic lockdown and foreign workers could not enter Malaysia to harvest more oil palm fruits.

As a result, many investors, including investors with very good foresight lost a lot of money. Based on the depressed CPO price, investors must avoid buying plantation stocks.