The stock and financial markets are fertile ground for the creation and proliferation of myths. It is very common in conversations about the stock market and investments typical questions and statements by the layman in this world arise : Can I make money fast” , “Do I need a lot of money to start investing” ” Invest is like playing at the casino” or “Investment in forex is very risky”.
All the myths have some truth, but the reality is that most of them are fake . Much of the responsibility lies in the profound ignorance of the people and the image that the media project . Therefore, the aim of this article is to debunk some of the most common myths about the stock.
Myth 1: Investing in the stock market is like playing at the casino
It is unquestionable that stock market investment has certain risks, which are reduced if the industry knows and how to invest; but that does not mean it’s a big risk and it is a gamble. As Benjamin Graham says , “in the short term the stock market behaves like a machine bounce, but long term it acts as a scale.”
Myth 2: The trading is for the rich
It is widely widespread myth that the forex market is a place where only the rich invest their money. Any person has the opportunity to invest their savings in the stock market, either directly buying stocks or investing through mutual funds.
Myth 3: You do not need much knowledge to invest in stock
Which it does not have the right skills and is doomed to lose money. Therefore, a good financial education is needed to avoid making big mistakes.
Myth 4 : Investing in the forex market is a quick way to get rich
The odds of getting rich quickly in the stock market are close to zero . In the short term market behavior it is unpredictable , which makes the chances of success making short-term operations are very low . The odds of succeeding in stock market investments increase proportionally to the time horizon of the investor.
Myth 5: The large, stable companies always generate profits
Not always invest in shares of large, stable companies generate profits. There are many large companies today (including reinvestment of dividends ) remain below the prices achieved at the height of the technology bubble. The price of entry determines the profitability of an investment. An excellent action purchased from premium becomes a bad investment.
Myth 6 : The higher the risk, higher profit
As Warren Buffett says, “is not necessary to do extraordinary things to get extraordinary results”. Just to have a better return on investment is necessary to invest long term in companies with competitive advantages and a wide safety margin.
Myth 7 : Only the “Experts” can make money in the trade
No need to be a guru in economics and finance to invest in financial markets. To invest successfully you must acquire an intellectual structure to significantly increase the ability to make wise decisions and especially avoid the psychological biases that make us worse investors.
Myth 8 : a high capital to invest in the stock market is necessary
You do not need a lot of capital to invest in stock . In fact it is advisable to start investing slowly to get familiar with it (there are investment funds which can invest from 1 € ) .