Finance

Published on May 19th, 2020 | by Sunit Nandi

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The 5 Biggest Myths About Wall Street

Those with only surface-level knowledge about the inner workings of Wall Street tend to believe some commonly-known lies about the way the market works. In order to protect yourself and your financial future, continue reading to discover the 5 biggest myths about Wall Street, and why they are debunked.

1. Only Wealthy People Know and Benefit From the Stock Market

There are definitely big shots on Wall Street who make some major money by brokering or investing. But they simply do not have a monopoly nor a higher stake on the stock market than anyone else.

In fact, technology makes Wall Street more accessible than ever. With robo-investors, smart apps, and Internet broker appointments, anyone with an Internet connection and a few dollars to spare can get started with the stock market.

2. Rising Stocks Will Eventually Fall

Ever heard the phrase, “What goes up must come down”? This may be a certainty when it comes to the laws of gravity, but the stock market isn’t so predictable. Stocks that continue to rise aren’t always doomed to fall again. The common notion that every stock has the same ups and downs is preposterous.

The price of Berkshire Hathaway’s stock went from just under $7,500 to over $17,000 per share within five years, then many years later it rose again to over $300,000. Stocks rise when the company does well, and they fall when the company undergoes financial trouble.

3. You Don’t Need to Know Much to Invest All Your Money

While it’s true that the stock market is more accessible and automated than ever, it still requires some research and understanding before you can confidently invest your assets into one stock or another. It is strongly advised that you work with a professional investor or stock broker to give you a better insight to current market trends. Professionals can also make recommendations on the best strategies and investment opportunities for you.

4. Investing is Like Gambling

Gambling and investing both involve some risk, that’s for sure – but that is where the similarities end. When it comes to the stock market, many average Americans are afraid of making an investment because it is uncertain that you will actually turn a profit from it. And while this is certainly true, there is a much higher level of assessment and analysis that goes into the stock market.

Investors and data scientists can measure the value of different financial ventures and assess what kind of gains will be had. This is much different in comparison to straight gambling, which is something that creates absolutely no value.

5. Those Who Have Fallen Will Rise Again

A certain company whose stocks may have at one point been high, but have seen a sudden drop, are not good companies to continue investing in. Some investors will blindly believe that stocks will eventually go back up again, but this is not always the case.

Again, it is not a matter of equal rising and falling. If you buy stocks once a market’s price has fallen, you have received nothing of value. There is no clear indication that the company can rise to meet its previous levels again, so you are better off investing in stocks that have recently gone up in value.

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About the Author

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I'm the leader of Techno FAQ. Also an engineering college student with immense interest in science and technology. Other interests include literature, coin collecting, gardening and photography. Always wish to live life like there's no tomorrow.



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