1) 95% of individual traders lose money over ANY 10-year period. Why? Mainly because most investors buy poor quality stocks, but I could write a book on the hundreds of other reasons why I think this happens.
2) 88% of mutual fund managers can’t beat the S&P 500 ($SPY). You know when your 401k plan offers you all those mutual funds to choose from? You are better off putting it all in an S&P 500 Index fund for 2 reasons: A) You have a 1 in 10 chance of selecting a fund that will beat the S&P and B) 500 multi-national companies is PLENTY of diversification.
3) Since 1886, the US economy has been in a recession or depression 61% of the time. I realize that the economy does not equal the stock market, but they are fairly correlated.
I don’t share these statistics to discourage you from trading. In fact, I highly encourage everyone to be involved in the stock market because the opportunities are endless. I’ve heard about so many people who supplemented their income, helped pay for their kids’ education, retired early, donated to great charities, and countless other rags to riches stories…all from the stock market. The key is to work hard at it, gain experience from actual trading, cut your losses, manage your emotions, and protect your confidence. Anyone can do it, but keep in mind, it takes hard work and of course some luck. As Thomas Jefferson said: “I’m a great believer in luck, and I find the harder I work, the more I have of it.”