Page 26 - Waterfall City Issue 4 April 2024

Waterfall City Finance

THE FIVE STOCK

MARKET MYTHS

keeping you from building wealth

By Wendy Myers, Head of Securities, PSG Wealth

M any people have no idea Investing and generating wealth

should not be confused with the zero-
where to start, how to invest,
sum game of gambling. Gambling
or what the risks are. Several
myths surrounding trading
in shares need to be debunked to help merely takes money from many and
redistributes it to a few. No value is ever
people make informed decisions that created. With investments, on the other
will benefit them in the long run. hand, an economy’s overall wealth
increases. This growth is reflected
Myth #1: Investing in the in companies’ share prices, which
stock market is like gambling investors benefit from if they hold
The reality of investing in shares is shares for the long-term.
nothing like gambling. To understand
why, we need to consider what Benjamin Graham, the father of value
investing in shares means. investing, rightly said that a market is a
voting machine (gambling) in the short
The concept of ‘buying a share’ may Wendy Myers, Head of Securities term but a weighing machine in the
be better understood if we phrase long run. Investing is an endeavour in
it as ‘buying a share (or portion) the long run.
of a company’. When an investor
buys a share, it represents fractional Those who believe that investing Myth #2: You can time the
ownership of a company. This entitles in shares equates to gambling do market
the shareholder to a claim on the so because they think of shares Timing the market is the idea that
company’s assets as well as a fraction of simply as a trading vehicle, and don’t wealth can be created by predicting
the profits that the company generates recognise that an investment in a share the right time to buy and sell. While
in the form of dividends. represents ownership in a company. seemingly sound in theory, it is a

24 Waterfall City Issue 4 2024