This book is a must read for any new entrant to stock market investing. Frank explodes some of the myths that surround the stock market and points out the traps and pitfalls to which unwary newcomers fall prey. Frank has a very clear message when it comes to investing your hard earned capital. “By investing visually you can get your timing right – buy stocks that are rising and make constant profit regardless of market conditions”
Chapter 2 Investment myths
Each stock market boom brings about a new wave of entrepreneurs and marketing gurus who will take advantage of the upswing using slick advertising and catch phrases to lure you into the latest investment. Dividend imputation funds, ethical investing, asset allocation, derivative trading and dollar-cost-averaging give the industry an exotic flavour. Money flows readily from our pockets into the latest managed fund.
I have felt for some time that many of the advertising slogans are derived from old ideas that will not help you to be a profitable trader. These slogans along with other “old wives tales” are what I lump together as market myths. As each new share market boom arrives another generation of new investors is swept along on the crest of a wave that finally comes crashing down on them. Bewildered first timers are left holding worthless pieces of paper as companies enter bankruptcy and disappear off the face of the planet.
Short-term trades entered for instant profit become long-term investments relegated to the bottom drawer. Losing traders have no idea what went wrong. They are often too embarrassed to make an effort to analyse their mistakes, pass on their knowledge and ensure the next generation is more successful. Once bitten, twice shy! Don’t expect to get an education from the broking industry. It does not exist for that purpose. It is there to take a commission or a management fee from you. Don’t expect your broker to make above average returns for you. Again, he is there to earn a commission. Each boom-time brings a new wave of investors being advised by a new wave of young advisors who have limited experience and lack the knowledge required to outperform the Index. Given that industry statistics show that 80% of newcomer lose, how good is the industry?
Many myths have been perpetuated over the years. You will be aware of them but will not understand how they affect your attempts to beat the averages. It is these Investment Myths that have led me to write this book. They are myths because they will not help you outperform the market index. I expect you want more than that. This book is about exploding those myths and trying to set the newcomer on the road to financial independence through profitable trading.