Stocks, Shares and Financial Spread Betting
Online trading in stocks and shares is now common place and there is no shortage of brokers to handle the growth in volumes of shares traded online. But this was not always the case.
Gone are the days when only wealthy people with access to expensive city brokers traded shares. In the UK, ownership of shares was taken mainstream and brought to the masses through the privatisation of previously publicly owned utility companies. The overall effect of the growth in market participation has been mixed. On one hand, many
more people have been able to participate in the wealth effect from the rise in prices of shares across the board. On the other hand, some argue that the growth in the ownership of shares has simply introduced a large class of less savvy investors into the system.
It's not difficult to see why this may be the case. The increase in public participation in the stock market coincided with one of the strongest periods of growth in equity prices across the world- a period extending from the mid 1990s to the peak of the equity markets in the first quarter of 2000. As the prices of shares rose, the interest of the investing public reached epidemic proportions! Unfortunately, not many of the
new investors fully understood what they were getting into and many came into the market with expectations of instant wealth.
The dotcom boom reinforced the get-rich-quick mentality. Unfortunately
for most private investors, they were pilling into the same stocks and
shares that the market professionals were offloading. When the fallout
came, private investors bore a large proportion of the brunt!
That private investors were the main suckers in the sharp stock market
falls from 2000 is not in itself surprising. In fact there are a number
of highly effective market indicators that are based solely on
the idea that private investors—and most of the 'gurus' that they pay for tips and advice—are the weakest hands in the great investment/trading game. When the professionals see that these weak hands are swinging to one extreme (such as extreme bullishness or bearishness), they simply
place their bets the other way! Guess who wins most of the time!
However, this need not be the case. There is no reason why private
investors cannot compete at the same level as the city professionals and
even beat the professionals at their own game. All that is required is
the right education and adequate research to make informed trading and
This is the key reason for the creation of this website: to provide you with the foundation to make sound decisions for yourself—whether that be through short term trading in shares via spread bets or longer term investment in shares.
If you enjoyed this introduction to online trading in stocks, then click here for more insightful articles to hone your spread betting skills