10 stock investing mistakes

Hi, welcome.

Today I am going to cover the mistakes that are commonly made when it comes to investing in the stock market. I will make it simple and easy for you to understand and apply to your life and investment strategy- if you have one.

Let’s get it into it.

1. A common mistake is trying to beat the market, you do not win in investing if you are constantly trying to outsmart the market, it is hard and uncommonly done, you have to play by the stock markets rules to succeed in the stock market.
2. Lack patience, the stock market is a device which transfers money from the impatient to the patient, most people sell their stocks too early, if you want to succeed in the stock market- you need to hold a stock for years in order to create wealth. Think long term.
3. Another common mistake is investing by speculation and not logic and reasoning. Most people try to invest by making irrational predictions and guessing what the market is going to do. To succeed you need to stick to logic and reasoning if you want to succeed in the markets.
4. Trying to diversify when you do not know what you are doing. Diversification is not necessary, if you understand the assets that you are investing in- diversification only works if you can maintain your returns and reduce risk at the same time. Otherwise it is worthless.
5. Selling to early, this is one of the most common mistakes- people lack the audacity and patience to make money in the stock market. If you aren’t patient, the stock market is not for you.
6. Another mistake is not applying a margin of safety in your investing strategy. If you do not apply a margin of safety, you will struggle to do well in the markets, a margin of safety is simply the difference in the price of the stock and it’s intrinsic value. You need to be able to invest in assets which offer a margin, as this will limit and make it almost impossible to lose money in the long run.
7. Having impulsive decisions take place in your investment strategy, impulsive decision making causes so many losses in the stock market. The stock market is a game of logic and reasoning and emotions should not be a part of your investment strategy.
8. Investing in assets that you do not understand, we try to hard to make investment decisions based upon what the herd is doing. You need to understand the asset if you want to succeed in the stock market, It’s that simple…
9. Going with the crowd, you are not right nor wrong because 1000 people agree with you, you are right if your logic and reasoning is right.
10. Trying to do to much at once, trying to find 10 gems in the stock market- focus is undervalued, you should focus on finding 1 fantastic long term investment, rather than 5 mediocre ones.

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Thank you for reading,

Have a great day,

Regards,

Jagdip