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Investing , Stocks

This Market Myth Has Crushed Countless Portfolios

How the stock market's "crazy" behavior fools investors

by Bob Stokes
Updated: December 13, 2018

It's a common myth that it's bullish when the market ignores bad news.

And that brings us to this Dec. 9, 2018 New York Times headline:

Wall St. Ignored Signs of Trouble for Months...

The article goes on to say:

When a trade war broke out between the world's two largest economies in June, investors barely blinked. After the Federal Reserve raised interest rates -- often a reason for investors to sell stocks -- the markets kept climbing. As some of the world's largest economies began to slow down, American markets largely shrugged it off.

And then came volatility: October, November and even the usually quiet month of December brought wild market swings.

So, clearly, the market's shrugging off bad news in the summer certainly has not been bullish, at least so far.

What investors need to know is that headlines -- positive or negative -- don't drive the stock market's trend in the first place.

Bob Prechter explains what market participants really need to guard against:

The true bad news, a real negative, is people telling you everything is fine when it isn't.

At the end of a long bull market, when the "fear of missing out" drives investors to "buy, buy, buy!" at any price, it's easy to find "people telling you everything is fine when it isn't." Perhaps that explains why investors ignored bad news this year -- and are beginning to pay for it.

Yet, the belief that it's bullish when the market ignores bad news is only one market myth.

Learn about several others in the free report, "Market Myths Exposed."

Is Your Portfolio Built on False Assumptions?

Download this Free 33-Page Report to Find Out.

Did you know that the vast majority of portfolios are built on false assumptions? These false assumptions -- or Market Myths -- have been passed down across generations. They are so baked into investor psyche that no one ever thinks to challenge them... but we do. Do earnings really drive stock prices? Can the FDIC actually protect you? Is portfolio diversification a smart move? Download Market Myths Exposed now and find out whether your portfolio is built on flawed foundations. We guarantee you'll be shocked to find the truth.

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