Sometimes an oft-repeated axiom, maxim, or cliché has at least a small piece of truth to it. Others make sense and are true in some situations, but not others.

The world of finance and investing is no exception to the coining of popular axioms and the misconceptions that can go along with them—especially when it comes to trading stocks. Traders are well-supplied with frequently repeated sayings that speak to perceived data patterns. And they must work to gut-check choices plagued by their own emotional biases.

On this episode of Financial Decoder, host Mark Riepe is joined by Nathan Peterson, director of derivatives analysis, to unpack a handful of these more ubiquitous expressions around investing and trading and give insight into how much weight they should carry in your decision-making.

To read the study Mark references on the connections between risk tolerance and visceral pain, check out "Relating the Visceral Factor of Pain to Domain-Specific Risk Attitudes" in the Journal of Behavioral Decision Making.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder.

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk, including loss of principal.

Past performance is no guarantee of future results.

All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, business, and other conditions.

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.

S&P 500® Index-Measures the performance of 500 leading publicly traded U.S. companies from a broad range of industries. It is a float-adjusted market-capitalization weighted index.

Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.

Supporting documentation for any claims or statistical information is available upon request.

The Schwab Center for Financial Research is a division of Charles Schwab & Co.

(0224-H6D2)

How To Change Your Finances in 1 Week