January 17, 2017
Markets & Investing
Common Mistakes Investors Make
Recently, I was asked in a radio interview “what is the biggest mistake investors make?”
Oscar Wilde said: Experience is simply the name we give to our mistakes.We investors earn plenty of experience.
Now, I can’t really think of any one particular mistake that is bigger than another but here are a few to watch out for…Don’t measure your investment success from the top….meaning if you start with a portfolio value of $100,000 and it runs up to $125,000 don’t think you lost money if your account value falls back down to $118,000 when the markets correct…you didn’t lose $7000 you are still up $18,000…while I recognize the perception of that event, the reality is a solid profit.
Don’t make decisions based on emotion…most of the time you’ll be wrong. In addition to that, last year I saw many people mix their political mindset with their investing mindset. That’s a recipe of emotional decision-making disasters.
Normally, that’s gonna send you in the wrong direction. Further, don’t believe everything you read or hear from pundits and definitely don’t believe everything you think. Worrying about the world coming to an end is also a bad investment strategy. You know, at times, optimism sounds superficial and pessimism sounds so profound. Come on, every bad thing that can happen isn’t going to happen and actually good things can happen when least expected. Stay optimist.
I heard someone say “the best time to invest is when you have money.” And while that might be true, don’t let that money burn a hole in your pocket. Patience and learning from past mistakes go a long way toward success in the investment arena.
Those are just some of the things I’ve learned over the past 35 years of my career. As other things come to mind, I’ll pass ‘em along.
Until next time…