Common mistakes of Investors
- Thread starter TraderTactics
- Start date
Market timing doesn't work.
The prior ones were a pullback and the last one was the breakdown
The most common mistake investors make is to buy or hold when there is >1% chance of permanent loss of capital. The second most common mistake is to buy when there is <99% chance of making superior long-term returns.
These mistakes are usually caused by i) not understanding the business ii) underestimating major business risks iii) not waiting for a sufficiently large discount to conservative estimates of fair value.
The most common mistakes traders make are:
1. Poor risk control
2. Trading without knowing that the odds are significantly in one's favour
3. Not planning for all contingencies - especially failing to consider how to know if you are totally in the wrong.
These mistakes are usually caused by i) not understanding the business ii) underestimating major business risks iii) not waiting for a sufficiently large discount to conservative estimates of fair value.
The most common mistakes traders make are:
1. Poor risk control
2. Trading without knowing that the odds are significantly in one's favour
3. Not planning for all contingencies - especially failing to consider how to know if you are totally in the wrong.
I agree with this
Evidence is completely to the opposite. People who short term trade, market time and other things drastically underperform investors.
Frankly, few people should be "trading" - only if they have true quantifiable edges, serious money/portfolio management acumen, and a sizable account
Instead, we get those who have no clue, have no idea what MM is, and expect to retire in 2 years on a $6K account. The 99% who expect to be the 1%, in spite of reality.
I am going to talk about investing mistakes.
1) All in margin in one stock.
2) Diversification in just one sector.
3) Selling winners and holding losers.
4) Selling when there is blood in the streets and buying when everyone is happy. (Warren Buffet does the opposite and so far it has worked for him, however, he could have scaled out of some of his positions when everyone was happy instead of just holding them forever.)
5) Not owning any dividend paying stocks as part of investing. Dividend paying stocks is one of the true edges since they will help protect a stock during a bear market and continue to give you money even if the stock does not go up.
6) Not owning gold, oil, or platinum stocks when countries are devaluing their currencies. Also, if you think they are all too expensive to buy now, you would be wrong, some stocks are about to get their mines started and are trading below their net asset value.
7) If you see a big short position, you need to determine why, since the shorts are usually smart money. Only if you can determine they are wrong, will it be a good idea to go long in hopes of a short squeeze. The difference being a small float stock where many of the shorts are retail shorts and not smart money.
8) Not owning some dream stocks and holding a core position until they pay out. These are stocks that if everything goes right for the company they could go up 1,000% in value.
9) Staying on full margin as the market is crashing.
10) Buying stocks right after Cramer recommends them.
11) Buying a stock that ends in a .pk
1) All in margin in one stock.
2) Diversification in just one sector.
3) Selling winners and holding losers.
4) Selling when there is blood in the streets and buying when everyone is happy. (Warren Buffet does the opposite and so far it has worked for him, however, he could have scaled out of some of his positions when everyone was happy instead of just holding them forever.)
5) Not owning any dividend paying stocks as part of investing. Dividend paying stocks is one of the true edges since they will help protect a stock during a bear market and continue to give you money even if the stock does not go up.
6) Not owning gold, oil, or platinum stocks when countries are devaluing their currencies. Also, if you think they are all too expensive to buy now, you would be wrong, some stocks are about to get their mines started and are trading below their net asset value.
7) If you see a big short position, you need to determine why, since the shorts are usually smart money. Only if you can determine they are wrong, will it be a good idea to go long in hopes of a short squeeze. The difference being a small float stock where many of the shorts are retail shorts and not smart money.
8) Not owning some dream stocks and holding a core position until they pay out. These are stocks that if everything goes right for the company they could go up 1,000% in value.
9) Staying on full margin as the market is crashing.
10) Buying stocks right after Cramer recommends them.
11) Buying a stock that ends in a .pk