How to Make Big Money Safely In Stock Market
by Henry Lu

(1) Stock Market is Tough Place to Make Any Money Consistently
NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual fund had rude awakening after the huge loss and scandals in many of the famous fund names.

Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, they're the ones who create opportunities for prudent, long term oriented investors.

To be successful in stock market, you either have to become an expert yourself or to seek help from real successful experts. Stock market is such a brutal place that there is no room for half-expert or expert pretenders. The truth is that only a small percentage of disciplined and experienced people earn disproportionate huge amount of return, many times at the expense of the rest. It is an insult to "Wall Street expert" professional title when so many of such "expert pretenders" failed to beat index or merely stay break-even.

(2) Majority of huge performance claims in Ads by "Experts" are not real
Too many investment newsletters or hot mutual funds touted their huge past performance and went into disaster later on. Who do you believe? I have been in this stock market long enough to know that majority of their claims are not "real". I will tell you why below.

The first reason is simply due to "cheating". Let's be honest about many Ads. Many of them do not tell the whole and true story of their performance. For example, they would tout huge percentage of gains for certain winning stocks and hide the losing stocks. If you look deeper into their whole portfolio performance, their portfolio performance was not impressive at all. Many investment newsletters will have multiple portfolios in publication. In their ads, they will only mention the performance of the winning portfolio and hide the losing portfolio. The problem with multiple portfolios is that when you subscribe to their newsletters, you would not easily know which portfolio out of many will have best performance in the long run. Which portfolio do you follow? Most important of all, which portfolio out of many does the newsletter author invests for his/her own money? If the newsletter author or the mutual fund manager does not invest into a portfolio himself or herself, how would you trust their services?

Even if past performance of a newsletter or a mutual fund was pretty good, it may not indicate good performance in the future. Many hot technology mutual funds jumped up 100% or more in the 90's and dived to their death after 90% to 99% of loss. Certain investment methods such as growth stocks investing are known to be risky. Momentum investing or day trading methods are known to be extremely risky methods that can wipe out life savings over night. There is simply no free lunch. While a risky method can produce fabulous gain in relative short term, over the long run, a risky method is more likely to make people poorer rather than richer even if a short term gain was gigantic. Gigantic short term gain is just a dangerous stock market trap to lure the inexperienced people into the market. Dreaming for instant satisfaction of huge short term gain overnight with speculation is just a recipe for disaster ahead.

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