Transcript:
I've talked about how stocksmake you money, but let's
talk about the flip side.How can a stock, how will
a stock lose you money?(intensifying swooshes)Right off the get-go, why would I sayhow will a stock lose you money?'Cause everybody loses money in stocks,and that's why diversification, meaninga bunch of different
stocks is so important,because stop right now if you thinkthat you're gonna be some stock protegethat's never gonna be wrong
or anything like that.Even Warren Buffett has lost money.But 101, how does a stock
actually lose you money?And to me, I guess it's just, I overlookthis, but I had several comments comein and people, which makes sense,they always say get to the far endof being drastic, but I've gottena couple of messages such as this.Can you always sell?What if there is no buyer?What happens then?But what if you do not have
any people to buy your share?Like I said, people always go in drastic,what if there's absolutely zero peopleto buy a share after you've gotten it?So I will look at that in a minute,but let's just kind of break
down what's going on here.So, that is you.And you have bought a stock for $25.So you have put $25 into the market,meaning $25 is at risk.Well exactly how is it at risk?How are you going to lose moneyafter buying a share for $25?If you get this, that's fine,you can stop the video, there'sa reason why this is a trading 101.I get it, it's basic, but some peoplewhen you're brand new,
it's a valid question,but how are you gonna
actually lose money on it?Well remember, you have
put $25 into a market,and I'm not gonna go all economics on you,but just understand that a marketis made up of a bunch of
people, buyers and sellers.So over here is the
remainder of the market.You have people all over the place,and they are just part of the market.Now the key thing here is in howa stock will lose you moneyis this market has got to be willingto look at this stock.So we'll go with stock XYZ, very creativeon my part, huh?So stock XYZ you bought for $25.All the market needs to be lookingat this, and at least somebody needsto be able, or not only needs to,but wants to pay $25.01.In that case, well that would meanyou would actually be
able to make a penny,'cause you bought it
for 25, but if somebodyin the market is wanting to pay $25.01,then hey, you made a penny.If somebody is willing to pay 26,then hopefully you're saying, okay,then that means I could make a dollaron it because someone's willingto pay a dollar more than
what I bought it for.But then there's the flip side.Let's say that everybody's lookingat this, and the market as a wholeis saying you know what, I'm onlywilling to pay 24.90.Well what did you buy it for?25, I don't want to
insult your intelligenceon the math, but 25 minus 24.90 equals10 with a minus there.So you actually are now losing
10 cents on this transaction,because the market, the only priceanybody's willing to pay in
the entire market is 24.90.What happens if the market is now saying,now I'm only willing to pay $20 for that.Again, not to insult your intelligencebut you bought it for 25.If the market's only
willing to pay $20-worth,then that would 25 minus
20 equals five, $5.But of course, it's down so
you put a negative right there.That means you are now losing $5.You put $25 into the
market, but the marketis telling you, yeah that
wasn't the best choice,'cause now it's only worth 20.Who says it's worth 20?Well, the market.If people are only
willing to pay $20 for it,by definition that's
what it's worth, right?Worth is only what
somebody's willing to pay.Now if the market's
only willing to pay 20,well then now you're losing $5.So let's take it to the drastic end,what happens if nobody out here,I mean nobody wants to
even touch it at all,that means people are willing to pay what?If nobody's willing to pay anything,then well that would be zero.Meaning, you have lost how much?If you bought it for 25 and nobodywants to buy it from you, then whatis that known as, well that wouldbe known as worthless,
worthless numericallyis known as well being worth $0.Meaning you have lost all $25.Now does this happen often, no.I mean if you're talking
about penny stocksand stuff like that,
yeah, this could happen.But most times, you'll be ableto sell it, but sometimes and it's gonnabe, you're just selling
it worth, or for lessthan what you bought it for, hence a loss.That's how a stock will lose you moneyand does lose you money because you gottamake sure that as soon as you buyit, the idea is eventually somebodyelse in the market is going to be willingto buy it for you at a higher price.And that doesn't always
happen, now that's why you,and that's where the strategy comes in,maybe you think oh that soundslike a pretty good challenge.I need to buy something that somebody elselater on is gonna be
willing to pay me more for.That sounds fine, well yeah that's whythe stock market is quite, it's a very,it's the game of games, 'cause thatis the game, but the kicker is,this game involves real money, your money.So that's why you can't just go outthere and just start randomly doing stuff,because if you're
stupid, and I was stupid,a lot of people are stupid when they firstget started in trading
in the stock market,then they're buying stuff and then theyfind out, uh oh, nobody
else is willing to buy itfor what I want to ideally sell it for.So that is how a stock loses you money,it's just based off of, what is the marketwilling to pay you for it?And if they're willing to pay you for itworth a price less than
what you bought it for,well then that's where you gotta startto do the math and figure out,how much are you actually
losing with again?But drastic case being if thereare no buyers, and that means thatit is worthless, if you go to somebodyand say, I'm trying to sell my car,but it's worthless, you would understand.And I'm saying, well
that means that your carmust be a really piece of garbage,'cause there's not anybody outthere that's willing to even
give you a dollar for it?Yeah that is worthless,
so that is what's goingon there, but again, I'm not tryingto steer you away from the stock market.Could this happen, well
sure it could happen,but if you're focused on the stocksthat you should be focused on, thenthe likelihood of that happeningis very, very tiny but that is howthe dynamics and the math of justa loss within the market works.If you are out there
trading alone currently,and maybe are in the market lookingfor a community to join to assistyou in your trading, or to just helpyou give you another set of eyeballs,then I do have a private trading communitywhere you can trade alongside meand other experienced traders.So what you see popping
up on the screen right nowis both an information
link, so if you clickon the Inner Circle one, that is goingto take you to the page where I explainall the details of what exactly comewith the community, both the chat roomand the newsletter.And then the other
image that has popped upis a behind-the-scenes tour whereyou can see exactly what is goingto be contained within the community.I take you through like I said,a behind the scenes tour of everything,and that way you'll know preciselywhat you are getting when you join.So definitely check that stuff outif you are interested and thinkingabout wanting to join a community,and let me know if you have any questions.
