Many Happy Returns Wall Street Wisdom: The Truth Behind Investing Clichés
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Feb 19, 2025 Delve into the truth behind popular investing clichés, as the hosts challenge ten well-known sayings and uncover their misleading nature. The conversation touches on the unexpected benefits of higher stock allocation for retirees and explores the psychological biases affecting investor decisions. With insights on the complex relationship between central bank policies and market behavior, the episode also decodes the origins of the terms 'bull' and 'bear,' revealing how these concepts influence modern investing.
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Buy the Rumor, Sell the News
- Buy the rumor, sell the news: Price movements often precede actual news releases.
- Act on rumors cautiously, as institutional investors have informational and execution advantages.
Falling Knives vs. Bouncing Balls
- Ramin bought Tritax Big Box after a fall, but it fell further, illustrating the risk of catching falling knives.
- Scottish Mortgage, another purchase, also fell initially but eventually recovered.
Cut Losses, Let Winners Run
- Cut losses quickly and let winning investments grow.
- Overcome the disposition effect, the tendency to hold losers and sell winners prematurely.