When it comes to investing, everyone seems to have an opinion. At family barbies, online forums, or even down the pub, ideas fly around and not all of them are smart. Some pieces of so-called wisdom get repeated so often they start sounding legit, even though they’re way off the mark. So let’s unpack some of the dumbest stock market advice people actually follow and why ditching these dodgy tips can help you grow your money more wisely.
Don’t invest in the stock market — you’ll lose all your money
This one’s a crowd favourite. Usually said by someone who’s stashed all their savings in a bank account thinking they’re playing it safe. But here’s the catch. Over time, inflation eats into the value of your money.
Even if you’re earning 6 percent interest and inflation is running at 5.5 percent, your real return is just 0.5 percent. And that’s before tax. On the other hand, markets like the NASDAQ have historically delivered solid returns because they reflect human progress and business growth.
Sure, markets can dip. But long-term investors who stick it out and stay informed often come out ahead. Steering clear of the stock market altogether? That’s some of the dumbest stock market advice you’ll hear.
Stocks always go up
Nope. Individual stocks can absolutely crash and burn. Just look at Enron or AMP. Once darlings of the market, now cautionary tales.
The market as a whole tends to rise over time because weaker companies are pushed out and stronger ones take their place. That’s why indexes like the ASX 200 or the S&P 500 grow in the long run.
But pinning your hopes on a single stock to always rise? That’s risky and frankly, part of the dumbest stock market advice you can follow. Diversification is your mate here. Markets recover but not every company does.
The only way to make money is to buy low and sell high
It sounds clever and looks great on a fridge magnet, but it’s not the only game in town.
Some traders profit by shorting stocks, which means selling high and buying back lower. Others buy high and sell even higher if the trend keeps running and the fundamentals stack up.
Take companies like Nvidia or Netflix. They kept rising even after doubling in value. Smart investors don’t just chant catchy phrases. They follow the data. So yeah, clinging to this old-school line is another piece of dumbest stock market advice that doesn’t hold up.
You never go broke taking a profit
This one gets thrown around a lot and sure, it sounds reasonable. But it can really limit your upside.
Let’s say you sell a stock for a 7 percent gain. Feels good. But if it climbs another 40 percent after you’ve cashed out, you’ve left a fair chunk on the table.
The pros plan their exit before they even buy. That includes setting both stop-losses and profit targets.
One solid approach is Cashflow on Demand strategy, which builds profit exits into the plan using options. It’s not guesswork. It’s a system. And way better than relying on the kind of dumbest stock market advice that sounds good but costs you later.
Never catch a falling knife
This one means don’t buy a stock that’s dropping in price. Fair enough on the surface.
But sometimes a price drop is just temporary or the result of panic selling. If the business fundamentals are still strong, it could be a golden buying opportunity.
For example, index funds like the S&P 500 often bounce back after dips. Buying in during a pullback can actually set you up for solid long-term gains.
Just be sure to do your homework. If a stock is falling because of fraud, shocking management or looming bankruptcy, give it a miss. Context matters. Taking this phrase too literally is classic dumbest stock market advice territory.
Don’t worry about risk management — you’ll recover
Honestly, this is about as bad as it gets. Every massive loss starts as a small one that didn’t get dealt with.
Without a proper plan, like using stop-losses, you can end up losing a lot more than expected.
Risk management doesn’t mean avoiding all risk. That’s impossible. It means protecting your capital so you can keep playing the game.
You can’t control the market, but you can control how much you risk. Ignoring that is not just risky. It’s some of the dumbest stock market advice floating around.
Final thoughts
Bad investing advice is everywhere. Hearing it a lot doesn’t make it true.
Smart investing means asking the hard questions, protecting your hard-earned cash and learning how the market really works.
Want to cut through the noise and get some real knowledge? Grab your copy of The Wealth Playbook at www.wealthplaybook.com.au
and start making smarter moves with your money today.
