Article: A Fresh Take On The World's Biggest Lies
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A Fresh Take On The World's Biggest Lies
We have all heard the jokes about the world's biggest lies being stuff like "the check is in the mail" and "I'll respect you in the morning." I'm now going to take this opportunity to refute some common, everyday fallacies by adding a few of my own to the list along with a brief explanation of each.
1) That stock can't possibly drop any further. Yes, it can. When a stock is free-falling, it can (and often will) continue to drop, sometimes all the way to zero. For example, take a stock that has dropped from $25 a share to $2.50 a share. Because the stock has already lost 90% of its value, some investors will "reason" that the most that can be left to lose by buying it is 10%. However, if someone buys the stock at $2.50 and then it continues its drop down to $0.25, they've lost 9...
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