Fifteen favourite fallacies

Introduction| Course| Q&As | Recommended reading| Quiz |

Introduction

Context

Beginners in investment are often subjected to proverbial wisdom on the subject by friends and do-it-yourself manuals. Much of it is very bad for them, because it is false or only partially true. If you are able to spot the flaws in many of these arguments before they influence your approach to investment, you may avoid serious losses.

Prior knowledge required

You will need to understand the distinction between speculation and investment, the basics of value and growth investing and the definition of smallcaps and largecaps.

Contents

1. "Investing is just gambling anyway, so why not take a few chances?"
2. "You've got to speculate to accumulate"
3. "Growth always wins in the end/Value always wins in the end"
4. "Blue chips are best/Smaller companies are best"
5. "Penny shares are the best value for money"
6. "It's such a great company, I can't go wrong"
7. "But just look at the dividends"
8. "I've got to be in technology/biotechnology/telecoms etc"
9. "I missed that one, I'll catch the next one"
10. "Paper losses aren't real"
11. "I'll never go broke taking a profit"
12. "It can't possibly go any lower"
13. "It can't possibly go any higher"
14. I can't sell because of the tax bill
15. "This time it's different"
16. Conclusion

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