Stock Market Investing: 80% Lose Money While Brokers Profit

Stock Market Investing: 80% Lose Money While Brokers Profit

The discussion begins with a painful reality: losses from June last year through January, when the market declined continuously, and any small gains were eaten up by broker commissions. Added to this are cases of individuals losing nearly €70,000 in savings, neighbors trapped in preferred shares (participaciones preferentes), and acquaintances who dragged their families into stamp businesses only to end up ruined. The underlying suspicion is that the system is rigged to wipe out naive entrants. A key statistic looms: only 5% of those who enter make money, and certainly not enough to get rich.

Simulators as a Mirror of Reality

The first response confirms the pattern: months of using simulators lead to the same conclusion—people don't dare take the step because they see they will lose. Against this, there is the voice of someone boasting about getting rich with a couple of well-planned trades per month, alongside warnings that this resembles sports betting too closely. Distrust of gurus is immediate: the only ones making money in the stock market are those selling courses and books on how to get rich investing.

Those Who Claim to Win: Funds, Dividends, and Patience

Some have been holding positions since mid-2017 with a +10% return, attributing it to funds rather than individual stocks. Another case: Amazon and PayPal rose 100% while Iberdrola and Inditex lagged behind, provided one invests money they don't need and forgets about it. Long-term strategies are defended with specific names: Netflix, Amazon, PayPal, bought after a month of daily analysis. The rebuttal comes quickly: long-term investing in the IBEX 35 isn't convincing, especially the discourse on compound interest and dividends over decades.

The Failed Strategy: Aena, Amadeus, and Stop-Loss Triggers

The most honest account is from an investor focusing on companies with upward trends in recent years. Aena worked until it started falling, and numbers turned negative when stop-loss orders triggered. Amadeus was liked for its sector, but the IBEX decline since last summer changed everything. The conclusion drawn is that the strategy was bad and simple, and the index drop swallowed any successes.

Consensus Among Experts: Indexing and Hands-Off Approach

The most repeated proposal is the global index fund: Amundi MSCI World or Vanguard Global Stock Fund, with fees around 0.3%, invested in the 1,700 largest companies in the developed world. Perfect diversification to avoid exposure to scandals like Payetes or Botines, or frauds like Gowex or Pescanova. Adding emerging markets is optional. Periodic contributions, larger during corrections. An indexed investor confirms averaging 5-6% annually.

The Undisputed Warning: 20 Million Professionals

The most uncomfortable argument involves 20 million professionals and hundreds of robots operating: little margin remains for the lamb among hungry wolves. An acquaintance with economic knowledge, who checked forums and articles daily as a hobby, made about €5,000 over two years but lost slightly more in a couple of trades when he let his guard down. Final balance: approximately €1,000 loss. The conclusion is that unless you're an expert, better not to play.

The 80% Loss Rate and Trading Nuance

The data showing 80% of investors lose money appears with the caveat that it's legally required at the bottom of broker websites. The nuance arrives immediately: this refers to trading, which is not the same as investing. In Spain, it may also be true for investors, because here people often use expensive and poor-quality bank funds.

Buffett, Dividends, and the Problem of Selling

Long-term investing is defended with the example of someone holding a cobalt mining company at a loss because they think like Warren Buffett and won't sell to avoid realizing losses, intending to hold for ten years if necessary. The opposite case is someone who sold Santander shares bought between €3.92 and €4.30, netting about €1,500 profit after deducting 19% tax to Hacienda (Spanish Tax Agency), but missed out on another €1,000 net gain by selling before the final surge. The sarracena: we are never happy, neither when losing nor when winning because we stopped earning.

Market Cycles Cure All, But Some Get Stuck

The experience of someone who started in 2000 and saw three portfolios fall more than 50% in 2008, waiting seven years, ends with profits upon selling. Everything is cycles, and it suffices not to put money into a company likely to go bankrupt. The reverse is someone who bought Telefónica at €8.10 and remembers it reached €19.80 in 2010 before crashing to €7.43 in 2014: those stuck at those prices may never recover.

Broker Business and Subsequent Taxes

The most repeated conclusion is that the broker always wins, charging fees whether things go well or badly, trinc by Hacienda claiming over 20%. With banking cartels fixing rates and deposits at 0%, there's no choice but to put some money in the stock market. The market requires experience but also luck; don't believe stop-loss analysts. Someone earning €1,000 gross annually in dividends is clear: as long as fundamentals aren't bad, it doesn't matter if the price falls to hell, because it's an opportunity to buy quality and never sell.

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The conversation closes with the same tension as at the start: losers talk about scams, winners talk about patience, and course sellers rub their hands together. The exact point where analysis gets stuck is the border between investing and speculating, which no one defines without looking down on those who err.