The Truth Behind Stock Market Myths

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Like it would for any subject, word-of-mouth can have a large impact on whether or not people decide to get involved with the stock market - "this can happen, that can happen, and you'll definitely want to stay away from that." But while some of the widely accepted beliefs have some truth to them, there are also a lot of beliefs that turn people away when they simply don't have to.

Thanks to NASDAQ, today, we're here to clear up some confusion and share the real truth behind a few of the most common stock market myths - take a look below.

Myth: Investing is the same as gambling.
Fact: Having a share of stock means to have ownership in a company - at the end of the day, it allows the share holder to have a "claim on assets as well as a fraction of the profits that the company generates." With stocks, there is value created each and every day. On the other hand, NASDAQ refers to gambling as being a zero-sum game, where there isn't ever any value created. Essentially, gambling results in money being taken away from one person and handed over to another. When you really assess the difference between the two, it is easier to understand that the value that can be provided through investing does not compare to the chances you take when gambling.

Myth: Only brokers and the very wealthy make money through the stock market.
Fact: It doesn't matter what class you fall into or how much experience you have, the stock market provides opportunity for everyone. Especially since the Internet was developed and more people started to gain access to information about investing and the stock market, it has become much easier for people to view the data they need and access the resources they're looking for to help them understand how it all works. In fact, NASDAQ explains that individuals may even have an advantage over institutional investors since they can more-so afford to focus on long-term goals. Thus, no, the stock market is not just for certain groups of people.

Myth: What goes up, must come down.
Fact: This may be true in terms of gravity and physics, but you cannot carry this same principle over to the stock market. Ultimately, the reason that a stock does good or bad has to do with the company - if the company is run well, why wouldn't stock continue to go up? While this isn't to stay that a stock that goes up will never come back down, you would be doing yourself a disservice to assume that a negative turn of events will always follow a positive one.

As professionals in the financial planning industry, we know that there is a lot to understand about the stock market and investing, and we know that it can be quite confusing unless you've studied it all for a long time. That's why we want to help!

Whether you're just about to get your feet wet in stocks or have been investing for years, allow us to work with you on developing a strategy that can provide you with a financial benefit in the long run.

To meet with one of our investment advisors, please give us a call at (516) 932-5130 or email info@americaninvestmentplanners.com today.

Investing involves risk, including the possible loss of principal. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.