2 Very Common, Very Dangerous, Investment Misconceptions

Dividends Forever
4 min readNov 16, 2022

A lot of smart people make terrible investments.

Even Sir Isaac Newton lost money buying near the very top of an early financial bubble.

In today’s article, I want to highlight two common investment misconceptions that many intelligent people fall for. Knowing about these financial fallacies allows you to identify and avoid them — saving yourself from unnecessary stress and hardship.

1. “This Company Owns A Big Building / Sports Stadium / Trophy Asset — It Must Be Legit”

Instagram gurus aren’t the only people who like to flex their wealth.

Many large corporations will buy “trophy assets” —like the tallest building in town, or naming rights to a sports stadium.

These are generally meant to showcase how powerful or successful a business is. But, trophy assets are often liabilities in disguise.

I don’t know about every sports stadium of golf sponsorship deal, but I do know a little bit about the Empire State Building, which I’m using as an example here.

The Empire State Building is one of the most famous and iconic buildings of all time.

Yet, real estate developers used to refer to this structure as the “Empty State Building.” Because most floors were unoccupied. In fact, the original owners lost around $1 million per year due to a lack of renters.

And, the Empire State Building owners didn’t break-even on their rent-to-debt payments until the 1950's.

The point?

Buying a tall building or sports stadium isn’t always a good investment.

These trophy assets can lose money, which becomes a problem if the parent company falls on hard times.

2. “I Just Learned About This, So It Must Be New Information!”

Anything you read in a book or see on the news is so far down the information-chain that it’s no longer a secret.

This doesn’t mean that the information isn’t valuable.



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