Yes, the famous misconceptions that many stock investors believe, such as:
* A "greater fool" will come along and pay more for a stock than they did.
* "Buy the dips" because stock prices always recover. (Historically, the actual pattern has been that a stock will keep on going down, with occasional upward movements, until it hits a low stability point, where it will stay for quite a long time.)
* "Averaging down" (buying more of a stock with a declining price, so their average price per share is lower) works. It would be more honest to call this "throwing good money after bad"!
* Wall Street firms have the best interests of investors in mind. THIS IS THE BIGGEST LIE! The financial industry does not care whether investors make money or not, only that their firms make a lot of money so they can fund lavish lifestyles for themselves. Wall Street is in the business of selling dreams of wealth to investors.
The basic trick is to create an interest, and a demand for their products like shares, just like any other business, except they aren't selling tangible items. Few people understand that when a brokerage issues a glowing analyst report on a stock, it is a sales tool, to move inventory, a sales tool that is no different than when your grocery store gives away booklets of chicken recipes, because they need to sell chicken. |
