However, in gambling every dollar won is a dollar lost by someone else. It must be this way because gambling produces nothing, creates nothing, and therefore can only return to a winner what it took from a loser. It is a zero sum game.

With a stock, no other person would have lost money simply because your portfolio of stocks gained in value. The value of common stocks increases without taking wealth away from anyone. In fact when the stock prices increase, the amount of aggregate wealth increases for society as a whole. This is because common stockholders do produce something: They postpone the consumption of goods (ie, they save some portion of their income ) in order to supply the seed capital needed to buy production equipment and produce goods.

Why do people assume this? For some, it is because they do not understand that stocks give a positive and substantial return over time - they falsely assume that stocks bounce around in the same range forever, and they therefore conclude they must predict movements in order to be able to sell at the top of the range and buy at the bottom of the range.

Yet, any serious review of the results of market gurus over a long period of time reveals a track record that is no better (usually worse than) a simple buy-and-hold strategy.

While this statement may be true in the physical world, it does not apply to the world of investing.

This has become a destructive misconception because most investors misinterpret it to mean accumulate shares that have fallen significantly in price. Whatever the reason for its appeal and widespread popularity, no myth is more pervasive among amateur investors, encouraging them to load up on shares that have recently lost a large portion of their value.

Professional traders and successful investors more often get involved with shares that are on their way up, even if they missed the first 10% or 30% of the rise. Rarely do they try and scoop up some 'bargain' that recently took a nose dive, because troubled stocks always have a way of going even lower.

Buying on margin defined: Borrowing money from your broker to purchase stocks.

This is one of the most dangerous, and potentially damaging methods of trading. Brokers have some pretty 'evil' loan terms and policies. Since your loan is ensured by the value of the stocks you buy with the borrowed money, a drop in the price of the equity suddenly leaves you without enough assets to cover the loan amount.

This is when the trouble starts, as you then need to provide additional cash. Of course, if you had the cash in the first place why would you have needed to trade on margin? So your broker starts selling off some of the stock from your account to cover their own interests, whether or not you had intended to sell the shares then or not.

It gets even uglier, but we'll leave the rest for the brave few to learn the hard way.

Generally, the truth is just the opposite. When the economic environment of the country is attractive to investors net foreign investment will be positive and sizeable. This inflow of capital will lead to a capital account surplus. With flexible exchange rates, the capital account surplus will lead to a current account (primarily trade) deficit. Thus, the current account trade deficit is the result of attractive economic conditions generating net foreign investment.

Just because you click "buy" doesn't mean that your stock or mutual fund will be purchased at or even anywhere near that particular moment in time.

Sometimes, especially during heavy trading periods in the markets, or as a result of computer problems, your online order will be processed minutes or even hours later. As well, many of the online discount brokers need to review your order before routing it to the exchange.

As a result, the price of the stock may have changed by the time your order hits the market.

Initial public offerings consist of the shares of publicly traded companies that are being offered for the first time to investors. Because the price often rises rapidly in early trading, they have become very popular in recent history.

However, part of the reason for first-day share spikes is related to the feeding frenzy created by the difficulty in acquiring shares (rather than the merits of the company).

As well, the limited supply often means that many small-time traders get left out in the cold despite their best efforts. Even though some online brokers are taking steps to get more IPO shares to individual investors, many traders will find it difficult or impossible to "get in on" a hot IPO in which they are interested.

To some degree this holds true, but too many external factors also have to come into play. For example, a company could have made a one-time asset sale which increased their earnings (and thus improved their P/E), although the number would not be based on normal operations and would not reflect the corporation's earnings power. In fact we are reminded of a specific example to demonstrate the point:

IIGP was a poorly run corporation, losing about $10,000 a day after income and expenses. However, through a $6 million asset sale on their books as earnings, their P/E showed as about 2.5 for a while. An uninformed investor may think this company was a bargain, when really it was a dog.

As well, a 'good' P/E ratio depends on the specific industry, the market environment, investor sentiment, and other factors. It also does not factor in concepts like earnings growth, technical analysis patterns, future operations, etc... Therefore, the P/E ratio is only a small piece of the puzzle.

This myth often forces investors to accept higher risk levels than they would otherwise be able to tolerate.

Stock investing is one of the best avenues the average person has of accumulating substantial wealth. And it really doesn't have to be very risky. True, usually higher risk investments mean higher potential rewards, but it is an imperfect ratio.

In fact, out of any two equities one will always be a superior investment once the risk/reward ratio is factored in. Some industries can suddenly become 'riskier' (ie-military technology if the government suddenly cuts back military spending) without a subsequent increase in the potential rewards.