For the fearful hearts keeping your money in cash and in the banks might be their idea of growing their wealth, but for the brave soul, investing in the stock market is their idea of wealth accumulation.
Fear would not take you anywhere. There might be unfortunate events that are uncontrollable, yet as it is always being said, increasing your knowledge and understanding about the stock market can help lessen the occurrences of unwanted incidents. Here are some of the top mistakes that investors tend to do and how you can avoid them.
- Not selling at the right moment
It is of utmost importance to know when to sell. This is the most difficult as an investor. You might be caught between selling winning investments too early and keeping losing investments with the hopes that they will soon recover. Thus, making you fear selling of stocks. To avoid such mistake, you have to establish an exit strategy and be alert if the market turns bearish.
It has been seen from history that during bear market stage even profitable companies can be severely affected. If you own a stock in a specific bearish sector, you should consider selling. No company would be safe from the growl of the bear. It is important to comply with the sale as to avoid losing money.
- Not applying objectivity
The opposite of objectivity as you know it is the quality of being subjective or being influenced by personal factors such as your feelings, tastes or opinions.
That is, being emotionally attached to your stocks might lead you to incurring losses in the end. As what experts say, only love a stock when it is making you money, and if it does not anymore generate anything for you, it is time to cut it off.
Also, it is a must to always base your decisions on reliable information rather than deciding based on emotions alone. It will produce remarkable results in the long run. Trading also using a proven methodology will prevent you from trading on emotion.
- Not taking into consideration earnings report
When you purchase a stock, you have to make it a point to be updated with the company at whatever form and cost. For publicly traded companies, they are required to announce their earnings report for four times annually. As an investor, you have to pay close attention to such events and use the following to your advantage.
Remember that it is already a bad sign when a stock fails to meet earnings expectations again and again.
- Not giving thought to high and excess fees
Fees are a form of spending that does not add any value to your investments. Actually, it detracts the long-term performance of your portfolio. You have to acknowledge that high fees cut your returns. Most of the time, investors tend to overlook this issue that fees can massively drag your portfolio.
Indeed, learning from the mistakes of others is one good way to avoid committing those mistakes yourself. The stock market is a complex system, you have to put in the time and effort to better prepare yourself. Always keep in mind that you have to avoid losses and take profits at whatever cost.
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