7 myths about the market that make poor investors

American economist Cullen Roche leads another system of market myths that seriously harm overconfident investors think they know everything, everything, everything about the world of finance. So, the next block councils traders.

"financial
markets - complex dynamic systems,
that simply swarming with illogical
and Prejudice participants. therefore
we tend not only to misunderstand
basics of functioning of the markets, but,
following common myths, to make
actions that harm our
financial well-being. our behavior
the market can adjust to
reduce the risks. Here - seven myths
which must not be misleading
investors.

You
too can become Warren Buffett.

we
We have deified the greatest investor
the planet over the past 30 years. but
a process which helped Buffett amass
huge capital, often misunderstood
treated. Legend of the Innocents of Omaha,
which is simply to choose
shares, made all the present generation
traders fall in love with the idea that
Each light can copy everything,
making Buffett. Do not do this
Error: old Warren - not just
collector trusted shares. That system,
that he was able to build a much
more complex, and only a handful of private
investors can at least come close
to repeat his story.

Berkshire
Hathaway, Buffett's company, on the merits
It acts as multistrategichesky
hedge fund. He has been involved in complex
insurance subscriptions, strategies
fixed-income, working with
shares of a non-linear strategies and
tactics. This is not a private brokerage
account, which is based only on
the value of shares. It is much more
serious and daunting system.
Repeat it is not just difficult - it is,
perhaps impossible.

You
You get what you pay for.

there is
few things are more harmful
to conduct portfolio than yield.
Most mutual funds give
Results lower than expected relative
the indexes, and in addition also on fees
above 0.8% on average than the basic
indexes. It does not look too
tragic, but count yourself: if
You put at 7% for 30 years, then your
total revenue decreased by 23%. the
ie, the investor who invests 100
000 dollars to the private index fund,
He received 590 000 dollars in thirty
years, whereas the profits of another
an investor who will invest the same money
nizkosborovy correlated to the index,
accumulated over 30 years of 740 000 dollars. Difference
obvious.

there is
on the market a simple and irrefutable
rule: all the assets is always someone
It supports. Therefore, in combination
Market activities are such that no one
It does not break. Thus, the investor,
which receives a higher yield
and subjected to a more serious movements
market, as a result may lose exactly
as much as his colleague who
live a more "modest". In finance, as
and in many other areas, "more" is not
necessarily mean "better".

You
We should focus on the fundamental
or technical analysis.

AT
financial circles do not cease battle
between supporters of the fundamental
and technical analysis. fundamentalists
It believes that to predict
how will move the assets you need to understand
the basic operation of corporations.
"Techniques" believe that the key to the future
- a summary analysis of the behavior of the asset in
the past.

but
This debate can be compared only with the attempt
determine what to do better - watch
the windshield or concentrate
attention to the rearview mirror. True
lies somewhere in the middle, because both
These methods will be useful to evaluate
the situation on the road. In financial markets
there should be no favorites. Here
no Holy Grail, and it is necessary to count
on the set of styles and approaches,
including both types of analysis - and
fundamental and technical.

Myth
the "passive" investing

this
character as a "passive" investor
not exist in nature. No one can
in reality to make an assessment of an asset
on a long term basis. Respectively,
we are all in some - active investors,
regardless of how we shape
your portfolio and what is the basis in
its activity: Do rebalansiruem
we, reinvest, whether the move
assets, how diversify
- does not matter. It should be understood that any
these actions can be like a recipe
our success, and the road to the abyss.

Of course,
it is important to reduce the losses and fluctuations,
but you can not take such a risk as too
major simplification of the portfolio. notion
passive investment based
with loud principles, but the people too
often overlook the fact that the management of
portfolio - is a process, not a passive
state.

Stock
the market will make you rich.

Most
market participants have a tendency
think about your financial position
general terms. But when you consider
its investment activities,
be sure to take into account the real thing.
Think of it in terms of the
income that you put yourself in
pocket, but keep in mind at the same taxes,
fees, inflation and all the other "unpleasant
complications "that will reduce the overall
part.

Remember
one simple thing: the stock market -
this is not something that will make you rich.
Users from the list of Forbes 400 never
received no means inconceivable jumping
in their brokerage accounts. they have amassed
his fortune in other ways:
fantastic management companies,
with the help of brilliant ideas or
obtaining rich heritage. Stock
the market can be considered only
as a way to preserve wealth and can
It is - multiply it, but it's not
the place where most of us end up being
state.

You
We must "break through" the market.

Difficult
do not be tempted by the charm of prospects
to break the market, and consistently
win, simply by buying shares. AT
Actually no one is making
wealth to market penetration, and the majority
of us do not even try it
do. Such attempt too risky.
Post your assets in ways
that are compatible with your financial
goals, and most importantly - opportunities. Not
expose their portfolio risk
gigantic level.

best
strategy - a long-term securities
paper.

Probably,
You may have heard about the securities for
long-term placement or strategy
"Buy and hold". This is usually fine
sold to investors, which entered into
misleading promise of entry to
a roller coaster ride of the stock market
25 years and leaving them in 65, then you're with
peace of mind to leave on a secured
retirement.

it
It did not fit with the way in
actually develops our
and the life in the stock market
I have to take this into account. Our
Life - a series of events. Forget about the long
run. There is only a short sprint
races. Planning ideas portfolio
"Buy and hold" and "long-term
securities "look good only
in research and development in terms of
12% profit per year. In fact
they carry more financial harm,
than anyone deserves."

Cullen Roche, founder Orcam Financial Group. Translation - Odillia.