Mistakes Most Investors Make
How can someone increase their odds of making money in the stock market? It is a question that all investors ask, but it is one that doesn’t have a simple answer.
The ways investors can go awry are many and varied, but for the sake of convenience, we have identified five specific mistakes that have ruined many portfolios.
Taking Profits too Early
The average holding period of stocks recommended in Nate’s Notes is three to five years – and some of our biggest winners (Apple and Celgene, for example) have been in the newsletter for more than fifteen years now. Patience and prudence will serve you well in the long run.
Failing to Plan
Making a plan is all well and good, you may be thinking, but exactly what do we mean when we talk about creating a plan for investing? How do you go about devising a plan that achieves results? In a nutshell, it is important to understand why you are buying a stock in the first place.
Trading Too Often
Patience—it can literally pay dividends for investors. Unfortunately, because there is a natural desire to “get rich overnight,” far too many people simply can’t sit still long enough to reap the real benefits of their investments.
Following Recommendations Blindly
One major problem with this approach is that it inspires people to buy stocks without knowing why they are doing so. They buy a stock on someone else’s recommendation, but what then? When should they sell?
Trading Emotionally, not Analytically
Going with your gut can get you into serious trouble, and investors that do so often panic when their stocks experience a momentary dip, frantically selling them off to minimize the damage. In many cases, however, this is exactly the opposite of what they should be doing.