Turn on the TV, and what do you hear? “Definitive” market phrases repeated by the financial media and talking heads that are actually misleading, careless, and quite useless.
Of course, the best advice to follow doesn’t come from people – it comes from the market action. Discipline and hard work trump complacency and laziness any day. So turn off the noise to be at your best.
Ignore these market phrases
It will be different this time.
Mark Twain said, “History doesn’t repeat itself, but it does rhymes.” When it comes to trading, two things never change:
- Traders’ emotions have always been driven by fear or greed.
- Markets rise over the long term, and while there are always dips, it is best to follow the market’s track record.
There is no alternative (TINA).
This fallacy is the result of media hype and talking heads trying to influence investors and push them into a certain asset class.
Diversification is the best way to play the markets, end of story. We have so many different asset classes to choose from – equities, bonds, gold, real estate, commodities and cash – so why wouldn’t we have an alternative?
TINA proponents try to scare an uninformed public into piling their money into one asset class at the wrong time. Ignore them.
There is too much cash on the sidelines.
I really do not understand this one. The assumption is that too much cash on the sidelines will cause a stampede of buying and drive prices higher. Not true. All traders and investors should keep ample cash on the sidelines so they can take advantage of dip buying opportunities.
Time to go all in.
This one drives me nuts, because it is the surest way to lose all your money.
The term “all in” should NEVER be used when it comes to investing; it is a set up for disaster. If you know me, you know that I often preach the importance of sizing positions correctly. Failure to do so will cut short your trading career.
This is a winning lottery ticket.
How often have you played the lottery and actually won? Treating option plays as long-shot lottery tickets has a very, very low probability of working out. Sure, sometimes long-shot plays work, but do not use them often as part of your investment strategy.
You have to buy this dip! You will never have another chance!
You hear this a lot during a bull market. When stocks just keep moving higher, buying a dip is often the only way to jump into the action. However, if you miss an opportunity, guess what? There will be another one!
There is no value in gold.
Gold used to be treated as the ideal investment during times of war or as an inflationary hedge. Now it’s often ignored, which I don’t understand. We can technically print more money, but we can’t simply manufacture more gold (or other precious metals). Never count out gold.
This article was updated on May 11, 2023.
Copyright: macor / 123RF Stock Photo
