The seven myths of investing

The misguided assumptions that exist in financial markets

MYTHS ARE widely held beliefs that are mistaken as truths. For example, for long periods of time people believed (and acted) as if the world was flat.

Below are similarly misguided assumptions that exist in the financial markets that I have come across during my in-vestment career. I have found the reality that lies behind these to be invaluable in guiding my investment decisions.

Myth 1: There is no free lunch
While I subscribe to the aphorism, “If something is too good to be true, it probably is”, I believe there is one free lunch in the financial markets, the impact of which is often understated. This has often …