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Olstein: This is the biggest investing myth

Talking Numbers

Bob Olstein, Chairman and Chief Investment Officer of The Olstein Funds, says Wall Street uses three big myths to lure investors. In this segment, he tackles one of the biggest ones.

There are rules, and there are myths. And Bob Olstein amassed huge wealth not by following the former, but rather by avoiding the latter.

Bob Olstein is the Chairman and Chief Investment Officer of The Olstein Funds. He's been managing and making money for his clients for over forty years. In other words, he's made money in all kinds of markets.

"Investors don't realize just how many myths are out there," Olstein told Talking Numbers. "Basically, there are all these myths that Wall Street uses to lure investors into making investments. And they're just not good advice."

So what are the three biggest myths Bob Olstein says you should avoid? Well, all this week, Olstein is revealing them to Talking Numbers one at a time.

First up, myth number one:

"A good company is a good investment."

This runs counter-intuitive to the whole "buy what you know" mantra that many famous investors recommend.

But Olstein says the whole approach over simplifies investing. The fact that you like Nike shoes doesn't mean the company's stock is right for you (well, that may be a bad example given Nike's meteoric rise, but hopefully you get the picture). According to Olstein, there or other factors that should drive your investment decisions than just simply familiarity. They include timing, patience, and more importantly, cash flow.

For more on what drives Olstein's decision making process, click on the video above. And be sure to watch for the other two great myths investors need to avoid.

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