This weekend when I was reading the Wall Street Journal, I started thinking about reasons why the market was inconsistent and struggling. I tried to think of "out of the box" reasons. Typically when the market isn't performing analysts are blaming a certain sector of the market for the downfall. The more I think about the market I realize that the market isn't determined by how the finance sector is doing or how the oil sector is doing, but that the market's biggest problem is the investor's perception. All it takes is one analyst to come out with a negative article that says, "So and so stock will go down in the next 3 months due to..." Right then investors freak and assume that they need to sell. So what happens, the price of the stock goes down and it keeps going down. Then other investors sell, so the price keeps plummeting. Then instead of people focusing on that individual stock, people start worrying about the sector as a whole. Those people who own other stocks in that sector then decide to sell away some of their stock. And then the general perception of the market becomes negative, and then people start selling stock like it is a disease. The approach many people take to investing in the market is usually a quite conservative approach to making money, but if you don't make good decisions you can easily lose money you put into the market. If the investors of the world would just be more patient and not worry so much, we would have a more stable market. Hopefully in the coming years investors will realize the value that holding a stock has, and if less people sell, then a larger percentage of people will see a better return in the value of their portfolio.
