3 Deadly Investment Mistakes You Must Avoid!
Most amateur investors and even some “seasoned” investors often complain that it is hard to make money consistently in the stock market, blaming the stock market for their losses. On the other hand, we also hear stories of savvy investors making spectacular profits from investment opportunities that are often missed by others. So what’s going on here?
After investing for more than 20 years and speaking to thousands of amateurs and professional investors, I came to realise that most amateurs often make the following mistakes that often cause them to get “burnt” and disillusioned.
1) Investing based on emotions, without a logical set of pre-defined buy and sell rules.
Most amateurs often invest based on emotions. They usually buy a stock because they feel that the stock price would go up, without any idea on how much the stock they are buying is worth. Trouble is, our emotions tend to get the better of us most of the time and this often lead to poor investment decisions.
2) Stubbornly Holding On To Losing Stocks
Without a logical set of pre-defined sell rules, amateurs often find themselves holding on to losing stocks for a long time. They usually “justify” their decisions by thinking that the price of the stock will rise eventually.
The problem with this approach is that by holding on to losing stocks for too long, the risk that the investor is assuming often rises to dangerously high levels. To make matters worse, when he finally decides to sell the stock, he will usually incur a loss that is much larger than intended.
3) Investing based on a prediction of the stock market direction
At any one time, there would usually be one group of analysts predicting that the stock market would go up and another predicting that the stock market would crash. So who’s right?
The truth is, no one can consistently predict the direction of the stock market. And contrary to popular belief, you do not need to predict the direction of the stock market in order to invest successfully! Rather, it is more important to able to spot whether the market is on and uptrend or downtrend and invest based on the current market trend.
So what does this all mean?
If you are planning to increase your wealth by leveraging on the stock market, it is crucial that you avoid these investment mistakes at all costs. And that’s just the start! The next logical step before you start investing on your own is to look for a reliable investment methodology which has performed well in a variety of market conditions.
The simple reason is that most reliable investment systems often comes with a pre-determined set of buy and sell rules. With these rules, you would likely to be less emotional when it comes to making investment decisions. In the long run, you stand a higher chance of achieving consistent profitability.
So there you have it. All the best to your investment success!
P/S: If you like what you have read so far and would like to learn more about the investment methodology that I have developed after investing for more than 20 years, then I would like to invite you to join me for the upcoming 3-hour information-packed Smart Investor workshop.