Archive - June 8, 2011

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5 Common Financial Myths Busted
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Friends Don’t Let Friends Watch Jim Cramer
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Why You’re Better Off Avoiding The Financial Wisdom of The Crowds

5 Common Financial Myths Busted

Perhaps you have seen the Discovery Channel television program “Myth Busters.” Adam Savage, Jamie Hyneman, Kari Byron, Grant Imahara, Tory Belleci go about proving whether myths are true or not. Unfortunately they have not tackled any financial myths, of which there are plenty. This post will address 5 such myths and perhaps motivate the TV show to address other financial misunderstandings.

  1. “Dollar Cost Averaging will increase my return.” Sorry folks, dollar cost averaging can make you feel more comfortable about investing into the markets, however there is no evidence to justify the belief that it will increase your return. A
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Friends Don’t Let Friends Watch Jim Cramer

I’ll admit that Jim Cramer is a very colorful character.  He has an opinion on the relative merits of thousands of companies’ stocks, and he seems to personally know the CEOs of each and every one of them.  And he talks way faster than most people can listen.

While I do use CNBC’s web site, I hardly ever watch their TV channel. I always recommend that investors shy away from Mad Money, and in fact all TV shows of that ilk.  You know the kind that “shares” “opportunities” for you or makes predictions on interest rates, stock prices, commodities, etc. …

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Why You’re Better Off Avoiding The Financial Wisdom of The Crowds

People are programmed to follow crowds because it helps our survival. If you see a crowd running in the same direction, you’re likely to follow it since “it must know something.” Doing so could save your life.

What about following the crowd when it comes to investing? Studies show the “wisdom of the crowds” becomes a liability in the investment world. This is true not only during bubble times, but during ordinary times, too.

During bubble times, extensive research underscores the wisdom of heading in the opposite direction when everyone is enthusiastic about something. Joseph Kennedy is said to have …

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