90% of investors lose money in the stock market due to easily avoidable mistakes
Having coached 150+ beginners, these are the top 10 mistakes you need to avoid if you want to succeed
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Having coached 150+ beginners, these are the top 10 mistakes you need to avoid if you want to succeed
//THREAD
'In order to become a great investor, you must understand how bad investors think'
- Peter Lynch
The concepts behind successful investing are surprisingly simple
Yet so many fail to make a profit
Here are the most common mistakes made by investors and how to avoid them
- Peter Lynch
The concepts behind successful investing are surprisingly simple
Yet so many fail to make a profit
Here are the most common mistakes made by investors and how to avoid them
1. Lack of Clear Goals
This is where it all begins - you need to know why you're investing in the first place
From your goal, you determine your time horizon and your risk appetite
Write down your goals and strategy when you start and refer to this with each move you make
This is where it all begins - you need to know why you're investing in the first place
From your goal, you determine your time horizon and your risk appetite
Write down your goals and strategy when you start and refer to this with each move you make
2. Trying to Time the Market
If you haven't tried this before, you're in the minority
Every new investor quickly learns that no one is capable of predicting how the market moves
Studies have shown time & time again that DCA (Dollar cost averaging) beats timing and BTD
If you haven't tried this before, you're in the minority
Every new investor quickly learns that no one is capable of predicting how the market moves
Studies have shown time & time again that DCA (Dollar cost averaging) beats timing and BTD
3. Unbalanced Asset Allocation
New investors often end up with an extremely tech-heavy portfolio, as this is where many of the 'hype stocks' sit
This leaves you exposed to the volatility of that particular market
Aim to balance your portfolio across several market sectors
New investors often end up with an extremely tech-heavy portfolio, as this is where many of the 'hype stocks' sit
This leaves you exposed to the volatility of that particular market
Aim to balance your portfolio across several market sectors
4. Using Chart History To Pick Stocks
New investors will look at the 1, 3, or 5-year chart for a stock that's had a good run and want to jump in on the assumption that with such historical performance, it must continue rising!
Unfortunately, this is often not the case.
New investors will look at the 1, 3, or 5-year chart for a stock that's had a good run and want to jump in on the assumption that with such historical performance, it must continue rising!
Unfortunately, this is often not the case.
5. Lack of Patience
Successful long-term investing is 1% buying stocks and 99% holding them & doing nothing, regardless of price action
The more you mess with your portfolio, the worse your returns will be
Concentrate less on price action, more on the underlying fundamentals
Successful long-term investing is 1% buying stocks and 99% holding them & doing nothing, regardless of price action
The more you mess with your portfolio, the worse your returns will be
Concentrate less on price action, more on the underlying fundamentals
6. Waiting to Get Even
This means you are waiting to sell a losing stock once it returns to its initial price
This is referred to as βcognitive error"
You're losing twice by holding a sliding stock AND being unable to redeploy that money into a business that may grow
This means you are waiting to sell a losing stock once it returns to its initial price
This is referred to as βcognitive error"
You're losing twice by holding a sliding stock AND being unable to redeploy that money into a business that may grow
7. Incorrect Investment Style Selection
You need to find a method that can honour your risk tolerance, objectives, and resources
One size does not fit all in investing and it would be stupid to pursue an investment strategy that doesnβt suit your investment goals
You need to find a method that can honour your risk tolerance, objectives, and resources
One size does not fit all in investing and it would be stupid to pursue an investment strategy that doesnβt suit your investment goals
8. Relying on Emotions
Pragmatism pays in the stock market
If you can't wait a few days to buy or sell a stock, you are likely acting on emotion.
You should not rush your investment decisions
The fewer feelings you involve in the market, the better
Pragmatism pays in the stock market
If you can't wait a few days to buy or sell a stock, you are likely acting on emotion.
You should not rush your investment decisions
The fewer feelings you involve in the market, the better
9. Falling in Love with a Stock
You see this everywhere on Twitter
There's a difference between adding to a winner which has strong underlying business fundamentals and adding to a stock that has risen because you 'like it'
Always refer to the strength & growth of the business
You see this everywhere on Twitter
There's a difference between adding to a winner which has strong underlying business fundamentals and adding to a stock that has risen because you 'like it'
Always refer to the strength & growth of the business
10. Over Diversify
Diversification is a great way to manage risks
But having a portfolio of >50 stocks as a retail investor is stupid.
This is diworsification.
You can't keep up with that many businesses and you'll end up with more losers pulling down your portfolio returns.
Diversification is a great way to manage risks
But having a portfolio of >50 stocks as a retail investor is stupid.
This is diworsification.
You can't keep up with that many businesses and you'll end up with more losers pulling down your portfolio returns.
BONUS
11. Misunderstanding Volatility
Most new investors don't seem to recognize that volatility in the stock market is necessary and unavoidable
Sentiment swings back and forth all the time
And there are many ways to leverage this
Play the long game & DCA
11. Misunderstanding Volatility
Most new investors don't seem to recognize that volatility in the stock market is necessary and unavoidable
Sentiment swings back and forth all the time
And there are many ways to leverage this
Play the long game & DCA
Ultimately, you wont always make the right decision when investing
Humans are emotional
And we act on these emotions with the choices we make every day
However, with the right resources you can overcome your own psychology and win
Humans are emotional
And we act on these emotions with the choices we make every day
However, with the right resources you can overcome your own psychology and win
Learn how to pick winning stocks and scale your portfolio FAST
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With 21 Courses & Video Sessions teaching you everything you need to succeed
PLUS regular updates at no extra cost
70% off
5 Copies only!
Click here π
financiallysavvy.gumroad.com
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