Armchair Millionaire Community Bulletin: Busting the Stock Market Myths

In investing as in life, mistakes are unavoidable. By knowing the common pitfalls that cause people to stumble, you'll minimize those mistakes and set yourself up for success.

New York, NY (PRWEB) June 22, 2004 -- When it comes to investing, mistakes are just part of learning the ropes, and we all make them. When we asked members of the Armchair Millionaire community to share what they'd learned from their past mistakes, we heard some terrific insights:

"Don't let emotions control your decision to buy or sell. Educated decisions are generally more sound than decisions made based on how a good day in the market makes you feel." --Rabiah

"If 'everyone' thinks a stock will go up for sure, they are probably wrong." --Elizabeth

"Never 'fall in love' with any stock. If it has met your expectations, it's perfectly okay to sell and take a profit." --David O.

"If someone gives you advice on investing in something you have no idea about, chances are if you lose money, you still won't know anything about it." --Chris

"Patience, patience, patience! Have faith in the long-term upward ability of the market and stop trying to outsmart it." --Trevor

As you continue your education in stock investing, be prepared to separate the nonsense from true wisdom. My guide busts the most common stock investing myths.

The Armchair Millionaire's Guide to Stock Investing Myths
If I like the product, I'll love the stock. Some people swear by buying stocks only of companies whose products they know and like. In fact, it's perfectly possible for a company to produce a quality product or service and still be on the rocks financially.

To be successful, I just need to find the right expert who knows which way the market is heading. The sheer number of market commentators on television is testimony to how many people believe this myth. The truth is that no one can consistently predict the direction of the market accurately. The good news is that by using a long-term, buy-and-hold strategy, you don't need an expert with a crystal ball.

The best time to buy a stock is after it's proven itself by going up a lot. Buying a stock that's at an all-time high is not much different from waiting for the price of a house to go up before buying. There are bargains to be had among value stocks, so don't pass by stocks that are "on sale."

To consistently make money, I just need to find the right system that will let me beat the odds. Wall Street isn't Vegas, and investing isn't gambling. We know that markets provide a return on capital over time. By investing for the long term, buying quality stocks and keeping them for as long as they still make sense for your portfolio, you'll capture your share of that return.

THE BOTTOM LINE: My grandmother tells me that that common sense is more uncommon than youd expect. When you put your own investing plan together, seek out an approach that makes sense to you and offers realistic returns. My own Five Steps to Financial Freedom," (www.armchairmillionaire.com) is one approach that you may want to consider. Its the result of painstaking research into the smartest ideas that make the most common sense. If you consistently make smart decisions about your money, you can achieve financial freedom.

This column appears each week on CNNMoney.com, the Web sites for CNN and Money Magazine.

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ArmchairMillionaire.com was founded in 1997. The company's first book, The Armchair Millionaire, was published in 2001. Today, www.ArmchairMillionaire.com is an established community of common sense savers and investors.

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Lewis Schiff
Armchair Millionaire
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