HH 10 Investment Mistakes Even Skilled Investors Make

Mistake #1: Only Planning for the Short Term

The most successful investors have the ability to see beyond the first few days or weeks and look into how a particular stock or market will behave in the next year or two. This allows them to plant themselves firmly in assets that will accrue in both capital gains and dividend yield over the long run. To gain a big picture view of a stock or market you’re interested in, pull up a daily price chart and observe the current pattern that’s unfolding.

Mistake #2: Keep Losing Positions Running

Mike Patton, a Forbes contributor and investment analyst, has heard this story dozens of times. And while it’s from different people and cases, the mistake attributing to such heavy losses is the same – failure to close a losing position. When people buy a stock and it closes an X number of percentage points against them, a common reaction is to wait for the stock to bounce back. Unfortunately, being hopeful and having faith in that losing position almost always never works out in the investing realm. Avoid this mistake by setting profit targets and, more importantly, stop losses before entering a position to protect your account from sharp price declines.

Mistake #3: Being Trigger Happy

Impatience and fear of missing out or FOMO as abbreviated in a lot of self-help investment articles are what leads investors to get in on a position without any or sufficient reasoning. It’s what forces investors, especially inexperienced ones, to abandon their technical analysis and strategies prematurely. And while it may lead to one or two winning positions, over time, it can expose your investment portfolio to high risks.

Mistake #4: Emphasizing Too Greatly on Past Returns

When choosing your next investment, don’t just rely solely on past market patterns and information. Just because you bought a tech stock in the past that produced a return, it doesn’t mean buying one now or buying the same tech stock today can yield the same result. The same goes when choosing mutual funds to invest in. While historical data helps put some degree of reasoning and logic to current market action, it isn’t completely indicative of what the future holds.