5 Myths of The Stock Market


In the current economic scenario with so many fiascos, fall outs and analysts opinion differences it is a natural progression that the investors’ confidence in the market is quite low. Investors are raising serious questions as to the feasibility of investing in the stock market any further. It becomes all the more important in the current scenario to keep a realistic view and not get carried away by news reports. Regardless of the current situation these are 5 common myths concerning the stock market.

1. Investing In Stocks Is Gambling: The most common perception of the stock market can even sound like the description of a gamblers den. To make this differentiation clear it is important to know what buying stocks are. Buying stocks entitles a person to claim a share of ownership in the company and a share of its profits and the losses as well. At times they are seen as trading vehicles. Investors track the company’s performance regularly to make trade decisions. Keeping track of the company performance and anticipating the future course it might take needs to be assessed to trade the stocks of the company being held, which is quite contrary to gambling. Assessing the company takes a lot of practice.

2. Stock Market Is A Playground For The Rich: A lot of reports that are published relating to the stock market which single out the super rich as the owners and controllers of the market. These reports are notoriously untrue and inaccurate. The rich may own a lot of stocks of the company but for the company to fare well in the market has to perform. People keenly following the progress of each company cannot be fooled. The introduction of markets to the internet has made them more transparent than ever before. All the data which was limited only to the brokers previously is now available to everyone interested.

3. Stocks Going Down Will Have To Come Up At Some Point: This is an almost devilish advice given to young investors. Not to say this is never true but it is no rule and no sincere piece of advice. Rather analyzing the performance of the company’s past record and the current state of the company serves better. The size of the company is no indication either to the future performance of the company. There can be no logical explanation for buying a company’s stock whose shares have been low for a year or so.

4. What Goes Up Must Come Down: This is just the opposite of the previous statement but just as untrue. There can be no reason to believe the share values of a company have to go down once they come up. There are various examples in the market that have shown a continuous and steady growth for as long as five years. Their share prices have been rising steadily without any drops. When a company is being run perfectly competently then there is no reason not to invest in it.

5. A Little Information Is Better Than None: Just like anything else and more so in this field half knowledge is not the most beneficial. If you can’t keep track of performances of companies then it is more prudent to invest a little in advisors so you can make well informed and comprehensive decisions.