Stock Market Wisdom: 3 Guiding Principles That Are Definitely Wrong!

Stock Market Wisdom: 3 Guiding Principles That Are Definitely Wrong!

Over time, many guiding principles have formed on the stock market that can be true, but do not have to be. Often it depends entirely on the individual strategy whether they apply. But in many cases, after a failure, we humans form an opinion that is usually not true due to a lack of experience and knowledge.
Here are three myths that are not true.

1. Stock market myth: “Gold fails as inflation protection”

Due to rising inflation, many articles and reports about gold have recently been read and seen. Periods of high inflation were compared with the gold price development and no parallel was found. “Gold therefore fails as inflation protection.”

But the stock market is not that simple and logical. The future is always traded on it. Rising gold prices and inflation rates never run parallel to each other. Of course, the price of gold could also fall in the future as a result of rising interest rates, but in the long term the precious metal remains better than any currency (euro, US dollar, etc.).

If you need more evidence, examine the gold price development in Turkish Lira. “Gold fails as inflation protection” is therefore not just a myth, but simply wrong.

2. Stock market myth: “Bonds are safe”

Investments that develop continuously are often considered safe. These include, for example, savings books, call money or government bonds. However, most people are too young or have little knowledge of stock market history to know that there are also risks associated with these investments.

Government bonds have often become worthless. In Germany, we have been spared in recent decades, but as soon as the mountain of debt becomes too large, a debt haircut could also threaten here. Savings books and call money, on the other hand, are constantly exposed to inflation. Thus, they lose purchasing power in the long term if they do not permanently offer a return above the average inflation rate.

3. Stock market myth: “Stocks are only for rich people”

This stock market myth is also definitely wrong. Many asset managers have a lower limit at which they accept clients. But with neon brokers, social trading and ETFs, we can already invest very little wealth and be better than the managers.

At the eTORO social Trader network you can already start with an depot of 200,- Euro.

If you want oknow more about social trading please follow the link: eTORO – EN – Season-trader


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