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5 Reasons Why Your Investments in the Stock Market do not Generate the Results You Want

5 Reasons Why Your Investments in the Stock Market do not Generate the Results

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Do you have the feeling that, no matter how hard you try, your investments in the Stock Market do not generate the results that you would like?

That, without really knowing why, it seems that you are not able to make the most of your potential as an investor?

Do you feel like you’ve reached a dead end?

If this is your case, don’t get overwhelmed anymore because exactly the same thing has happened to me and I assure you that, even if you don’t know what it is right now, there is a reason why your investments in the stock market don’t finish taking off .

And, from my experience in the financial markets, I am almost convinced that the reason that prevents you from moving to the next level is among the 5 reasons that I am going to present to you below.

So, pay attention and take good note of the clues that I am going to give you today so that you discover, once and for all, what is that barrier that prevents you from achieving the results that you want with your investments in the Stock Market .


Reason #1: Stagnate your money in mediocre companies

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This is probably one of the main reasons why your investments in the stock market are not generating the desired results.

You may be unintentionally stalling your money on low-quality businesses that can only bring you low-quality results.

And it is that, despite the fact that price and value are two completely different things that in the short term move away to offer you fantastic investment opportunities, in the long term they tend to come together again when the market recognizes said value.

Therefore, if a good part of the companies that make up your portfolio do not increase their market prices over the years, it can be interpreted as a clear indicator that their businesses do not manage to increase their value either.

And, by not increasing its value, even in the long term the price tends to stay close to that stagnant value, preventing you from enjoying the generous capital gains that would boost the results of your investments in the Stock Market far beyond what you get now.

Another sign that you might be stalling your money in low-quality companies is the continual dividend cuts that your businesses announce when they are experiencing financial difficulties or downturns.


Also Read: Do Small Investments Make Sense? ▷ Where to Invest Little Money

In this sense, there can always be a company in your portfolio that suffers a temporary dividend cut, since it is part of the nature of the investment.

The problem, however, appears when these temporary cuts become permanent and affect a considerable part of your investments in the stock market .

But the thing does not end here, since in recent years, especially in Spain, a dishonest practice by some companies has become fashionable as it is disastrous for the investors whom they manage to deceive.

Yes, I am referring to the famous scrip dividend that many companies incorporate into their dividend policies when they go through unfavorable circumstances.

So now you know, if when looking at your portfolio you realize that a significant part of your companies are “paying” you with the scrip dividend or flexible dividend modality , you should be aware that, in reality, they are not paying you at all. nothing .

In these companies, your dividend yield is zero. Yes, zero.

And, if the dividend yield of a large part of your portfolio is zero and, in addition, you do not accumulate capital gains in the long term because the value of your shares stagnates, this is probably one of the reasons that explains the lack of good results of your investments in the stock market.

Solution: invest ONLY in high-quality companies

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If you want to make money on your investments, you need to invest in good companies .

And let’s not talk now if your goal is to live on them.

You need to move away from the mediocre companies that barely make enough money to survive and focus on the ones that, year after year, increase their solid and generous profits.

You should steer clear of businesses whose excessive debt threatens their very existence and turn your attention to those that are financially sound and healthy.

You must get away from companies whose cash flows barely allow them to maintain their dividends and put your money in companies that generate enough cash flows to continue to grow and increase dividends year after year.

You should, in short, invest only in high-quality companies .

And, to separate the good companies from the mediocre ones, you need an analysis methodology that allows you to read and interpret their financial statements in a simple, practical and direct way.

Tell me, if you had to buy a part of the hairdresser where you get your hair cut, the supermarket where you do your shopping or the restaurant where you go to eat on Sundays, wouldn’t you first look at how much money they make and their financial strength?

If you want to make money on your investments, you need to invest in good companies.

On the Stock Exchange, it’s the same, with the only difference that listed companies make much more information available to you, accessible with just a couple of clicks and completely free of charge. Take advantage of it in your favor!

Reason #2: You buy your stocks too expensive

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This is, along with the previous one, the main reason why your investments in the Stock Market may not be offering you the results they should.

Have you ever bought a stock and, no matter how long you wait and wait, they never seem to want to go up in price?

What’s more, do you even get the feeling that they were waiting for you to buy them to collapse and never recover again?

Does this situation sound familiar to you?

If the answer is yes! and on top of that it happens to you with an alarming frequency, it is a clear indicator that you are paying too high a price for your actions.

And it is that, if buying good companies is essential to earn money with your investments in the Stock Market, paying the right price for their shares is the key to turning those good companies into good investments.

Remember that even the best company in the world can become your worst investment if you pay too high a price for its shares .

Therefore, it will be useless to carefully choose the businesses in which to trust your money if you then buy them at prices that eliminate your safety margin and destroy your current and future profitability.

Another way to detect that you are paying too high prices for your investments in the stock market is to see how often you get tired of seeing them with latent losses and end up selling your shares, converting these losses into real losses .

If it happens more frequently than you would like, it is probably because you paid an excessively high price for your actions.

Even the best company can be your worst investment if you buy their expensive stock.

Solution: Correctly value your shares and buy them below their value

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If you want to turn good companies into good investments, you must find out what their value is and wait patiently for the market to offer you their shares at a significantly lower price.

By paying for your shares a price lower than its value, you will achieve two things at the same time.

On the one hand, you will enhance the profitability of your investments , both via dividends and via latent capital gains.

Oh, by the way, compound interest will take care of multiplying that extra return until it becomes the one that makes the difference between average results and ones that allow you to be freer.

On the other hand, you will enjoy a wide safety margin in each and every one of your investments in the Stock Market that will protect you against possible calculation errors, changes in the quality of your companies and adverse circumstances derived from simple bad luck.

Simply put, buying your stock at a discount to its value will allow you to increase returns while reducing risk, or in other words, earn more by risking less .

And, to discover the right price at which to buy your shares, you need a valuation method that allows you to value them in an easy, practical and reliable way to compare them with their price.

Don’t you go crazy when the sales arrive?

Well, when you know how to value the shares of those companies that you like so much, the next sales on the Stock Exchange can literally change your life for the better.

Reason #3: You pile up your investments without any criteria

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As much as you invest in quality companies and pay the right price for their shares, it may be that what is holding back the results of your investments in the Stock Market is the way in which you combine all those investments.

You may be simply piling your investments on top of each other without any criteria.

Tell me one thing, do you think you are distributing your capital in the most optimal way possible?

Do you have a few companies in your portfolio that you know well or a long list with 40, 50 or more businesses that you barely know what they do?

Do you maintain the optimal level of liquidity to minimize the opportunity cost but at the same time allow you to take advantage of the best investment opportunities when they arise?

Perhaps you are overweighting a certain sector or a certain company?

Or is it the currency risk that unbalances your results?

If you don’t have a clear, direct and instant answer to each and every one of these questions, it is most likely that you are not managing your portfolio in the most efficient way possible.

In a nutshell, you are missing out on one of the greatest tools available to you to boost the results of your investments in the Stock Market: your own portfolio .

Solution: optimize your investment portfolio on the stock market to the maximum

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The whole is greater than the sum of the parts .

That is the idea behind portfolio optimization .

And it is that, if you really want to obtain those results that you deserve with your investments in the Stock Market, you must be able to take full advantage of the existing synergies between your investments .

You must identify the key points that condition the profitability and risk of your portfolio beyond that related to the individual investments that make it up, so that you can combine them in the most optimal way possible.

To do this, you need to optimize your portfolio to the maximum and turn it into the tool that will allow you to take the results of your investments in the Stock Market to the next level.

So now you know, stop mindlessly piling your investments on top of each other, focus on constantly keeping your portfolio in tip-top shape, and enjoy results in tip-top shape.

Reason #4: You Follow Others’ Investment Recommendations

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I will never tire of repeating it.

Investing following the recommendations of the guru on duty, your brother-in-law or the neighbor on the fifth is not a solid, robust or proven investment philosophy.

Well, what is proven is its ineffectiveness and dangerousness.

And, since in my building I am the neighbor on the fifth, you should not pay any attention to me either, except when I tell you that you should not pay attention to me, in which case you should pay attention to me…

Have you seen how I just complicated my life with a simple phrase?

Well, don’t complicate yours by following the investment recommendations of others!

Obtaining the results you want with your investments in the Stock Market is much easier than you think, as long as you are able to make the right decisions for yourself.

Tell me something. What was the last investment you made? What company did you buy? Why did you buy it? And why did you pay the price you paid for his shares?

If you do not have a clear and convincing answer to these questions, it means that you are not clear about the reasons why you make your investment decisions.

And, if you are not clear about the reasons behind your investments in the Stock Market, it is probably because it is not you who takes them, but others take them for you.

eye! You do not need to hire a manager for others to decide for you.

It may be that those decisions that you make thinking that they come from you, in reality come from some analyst, blogger or co-worker with whom you trust more than yourself.

But do you know what happens when you invest following the decisions of others? That you get the same results as them, not the ones you want.

Solution: make your own investment decisions without depending on anyone else

This is my main objective with Awake Your Money: to share what I know about investing in the Stock Market and Financial Education so that you can make your own investment decisions without depending on anyone else .

Note that it’s called Wake Up To Your Money, and not Wake Up Or Your Money. It’s you who should wake him up, not me. I can only show you how I do it, what works for me and what doesn’t.

For this reason, you will never receive any concrete investment recommendation from me. There are already many websites dedicated to it and, if you follow them without blinking, they may have become the reason why your investments in the Stock Market do not generate the results you want.

So, please, if you want to invest in the stock market, do it right or don’t do it .

And doing it well necessarily implies making your own investment decisions without depending on anyone else.

Learn how you want, with my training products , with free articles or with the courses of other bloggers. It doesn’t matter, but make sure you receive quality training that allows you to make your own decisions.

When I receive an e-mail in which someone asks me if I dedicate myself to managing other people’s money or if I know a good manager to manage an investment portfolio on the stock market, my answer is always the same: Look in the mirror and you will see the best manager you can hire .”

If you want to invest in the stock market, do it right or don’t do it.

Reason #5: You get carried away by the fear of losing money

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The fear of losing money makes you lose money in the stock market .

It’s a shame, but it’s true.

Fear paralyzes, confuses and makes you doubt those decisions that minutes before you saw with total clarity.

And, in the Stock Market, fear is one of the predominant emotions. Specifically, the fear of losing money .

It can manifest itself in many ways and sabotage your investments in the Stock Market without you even suspecting it.

It is the fear that prevents you from buying those shares in the middle of a stock market crisis, the one that makes you doubt the quality of that company when the following year the dividend does not increase as much as you expected and the one that pushes you to trust the opinions of others.

Therefore, it does not matter that you are able to identify the best companies, that you know at what price to buy them and how to combine your investments in the most optimal way possible: if fear makes its way into your investment routine, it will sabotage your results .

Solution: learn to live with fear

Stop being afraid is very difficult. In addition, fear helps keep your attention and do things carefully, something essential if you want to live on your investments in the Stock Market.

The danger is, however, when it paralyzes you and leads you to make decisions that you would not make if you did not have it.

Therefore, it is not about avoiding it, but about learning to live with it.

Living with it, in addition, you will get used to having it controlled within your investment routine, so it will be much easier for you to identify it in others and take advantage of it to buy the shares of those excellent companies at the right prices.

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