On the back of a recent Bloomberg interview with John Dorfman I am pointing out Dorfman’s 10 market myths that bedevil investors:
- Myth No. 1: The best companies make the best stocks. Stocks advance when a company exceeds prevailing expectations. The best companies usually generate lofty hopes among investors, which are hard to exceed.
- Myth No. 2: In today’s volatile markets, one must be an active trader.
- Myth No. 3: Analysts are a good guide to picking stocks.
- Myth No. 4: Beware of October, the killer month for stocks.
- Myth No. 5: You can count on the U.S. presidential cycle to predict the market.
- Myth No. 6: Price-to-earnings ratios are the perfect measure of a stock’s value.
- Myth No. 7: Stocks should be bought when they have momentum.
- Myth No. 8: War is good for the stock market.
- Myth No. 9: The market prefers Republicans.
- Myth No. 10: Market timing can greatly enhance your returns.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.