Saturday, 16 March 2019

Mistakes Beginner Investors Make In The Stock Market - Avoid Them

Mistakes Beginner Investors Make In The Stock Market - Avoid Them

In this article we're going to cover the 4 investing mistakes that so many people make when they first start investing, I know I have made all this 4 mistake when I first started investing so I thought I just share these with you

1. Trying To Time The Market

The first mistake a lot of people make when investing and that is that they focus too much on the macro and not enough on the actual micro within the actual business that they're analyzing

A lot of people try to time the markets, but relying too much on the macroeconomic predictions can really hurt your portfolio growth in the long run, that's something that Warren Buffett and many other expert investors preach all the time that timing the market can be a huge mistake for people

It's nearly impossible to accurately predict where the economy and the stock market will be in the future and that's why Warren Buffett said don't try to time it, just find companies that are truly undervalued

Just remember that no matter where the economy stands at the current moment there will always be a certain company that is undervalued regardless of the current economic situation.

In 2008 when almost every company crashed in the fall of 2008, some companies rose during that time so there will always be certain companies that you can find, so don't focus too much on trying to time the market as a whole, that usually just don't work out for people

2. Relying on Other Opinions

The other mistake that I think is very important to understand is when people don't do their own research but instead rely on other opinions too much

What happens too often is that new investors will hear this stock prediction sort of and then immediately they just go out and buy shares of the company without doing enough of their own research

It would be very foolish for someone to hear someone talk about a stock and then immediately just go out and buy it without questioning anything, it's very important to do your own research on every single stock that you may hear from friend, family, it doesn't matter where you're getting this hot stock pick from

3. Emotions

The other mistake people make is that they let their emotion have an effect on their investments and this is something that's really not easy to control whatsoever but I can significantly hurt your portfolio in the long run

For example, when Facebook stock really dropped like 4% or 5% percent back in November, some people sold their share because they sort of lost sight of the long-term growth of the company but they instead let their emotions get the best of them with that thought that oh my god maybe the stocks can go down to zero

It's understandable when you're losing 4% or 5% percent, very scary but it's important to be able to stomach some of this volatility throughout your investment career

The market is always going to have its ups and downs and it's important to you as an investor that you can look at your portfolio on any given day and see a 3% or 4% of loss without really panicking and selling everything

4. Trying To Get Rich Quickly

It's so tempting to fall into these get-rich-quick schemes that so many people promote but if you can have the discipline to actually invest into truly undervalued companies for a long term, you're almost guaranteed to accumulate wealth throughout your lifetime

That is about it for this article, hopefully, you learn something new

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