Five popular stock market myths to avoid

When I wrote about income strategies, I started by debunking a couple of stock market myths. The first was that reinvested dividends comprise the bulk of stock market returns. (The truth is that both dividends and capital gains are roughly equal in their contribution to equity returns.) The second myth was that dividend growth investing is a good idea. The empirical evidence shows that investing for dividend growth is a strategy that underperforms simply buying the current highest-yielding stocks, which in turn, underperforms other popular value strategies. Dividend growth investing adds complexity and reduces performance. Believing the dividend growth myth has probably cost value investors more money over the years than many more obvious investing mistakes. I showed investors a better way to build an income strategy here.
Stock market myths don't just exist in income investing. Everyone has an inbuilt bias to believing myths. It comes from a gap between how people think they assess new information and how they actually do it.
This is how people believe they will react to hearing a novel fact:

They hear something.They weigh up the evidence for and against the proposition.Based on the evidence, they...