Stock markets are driven by fear and greed, so it should not be much of a surprise if there are a lot of market myths. Learning about these myths are very important because it will make you aware of what is actually affecting the market and what is only generated by the creative human mind. However, these myths can also a self-fulfilling because there are so many people that believe in it the stock market moves.
Below we will list some of the most popular stock market myths there is.
What goes up must come down
There are so many stocks that have gone up over the years and some people wait for the stock to go down at a discount before they want to buy these stocks. These investors might not be able to buy these stocks because it never dropped to the price that they wanted. There are some very expensive stocks like the Berkshire Hathaway that have reached $6,000 per share. Then it reached $10,000 per share. A lot of people never imagined that the share will reach $70,000 per share but inflation alone would help stocks continue its upward momentum. The lesson here is that we should not always wait for the price to drop that we think at its discounted price. If you have research properly and found a good stock maybe it is not always a best practice for wait for the price to drop.
Stock investing required advance training and college degrees
Stock investing sounds complicated and difficult. The charts are enough to scare the general population from starting in investing. Because of its complexity in the surface people often thought that stock investing requires advance training or college degrees and this is far from truth. With the internet age anyone who is interested can learn anything about stock trading. If you are also a new trader and is still afraid to invest your money in live markets. There are a lot of virtual trading platforms that you can use for testing your strategies.
Mutual funds beat the stock market
This is not always true there are a lot of mutual funds that could not even be at par with the you country’s index. Sales people from these mutual funds will most probably oversell their fund to attract investors in their fund. This is also similar with insurance agents that is usually adding flowery words in their mutual funds that may attract investors to add money in their funds. Also, even if the mutual fund you are investing at have beat the stock index there are still a lot of fees that will be deducted to your initial investment from the sales commission to the fee of the fund manager.