Everyone has their favorite stock market myths but here are a few you might like to add to the collection:
Fallen Angels Rise
The devil is in the details. The rationale behind this myth is that buying at a 52 week low leaves nowhere to go but up. Buying on price alone is a recipe for disaster. Companies can – and will again – be delisted. It is possible for a stock to decline even further. Buy value not vapor.
What Goes Up Must Come Down
Really? Was Berkshire Hathaway expensive at $6,000 per share? What about at $10,000 per share? Who could have imagined $70,000 per share? That is just the point; the force of gravity doesn’t apply to finance. Inflationary pressures alone dictate a continued upward momentum for the entire market so it is at least theoretically possible for any given stock to
continuously increase. Notice – we didn’t say “probable” just “possible”.
Stock Market Investing is the Same as Gambling
This really depends on how you go about it. If you follow the masses then
chances are you will obtain the same returns…dismal. On the other hand,
vast fortunes have been made by more than chance alone.
To find out more, head over to Wall Street Survivor.