A lot of investing shows, books and blogs have come up with different kind of investing strategies which if followed by an individual can lead to some serious pitfalls. Mentioned below are all my own personal opinions
1. Double Down: Let’s say an investor buys an investment hoping he’s going to make some quick gains just like how his friend told him or someone on CNBC or BNN said so, the next couple of days the investment value goes down in value, guess what he buys more, and it goes even lower and he buys more. Therefore, instead of a quick gain, the investor is made to look like a bag holder and only hopes that the particular investment is going to increase in value EVENTUALLY. The following UNG : United Natural Gas chart is the perfect example of not to buy 52 week lows, cause guess what it hit 52 week lows again and again and again.
2. Don’t be a hero: Most investors have that rush of blood of trying to be hero and go about telling everyone, how they nailed the top and bottom of a particular investment. As an investor, you should rather be looking at trying to find the trend and ride it till it reverses. Most top or bottom pickers don’t survive long, google it and you would know yourself. All the top pickers have never rode the whole trend up or down, instead have closed out their positions with very little gains, however, the amount of risk which most of them have taken are undefined as you never know how high an investment can go or how low an investment can go.
3. My Financial Advisor or Fund Manager is going to handle my finance: Time and again, I have gone around beating my chest, mentioning not to rely on what someone tells you to invest but instead try to learn about investing at your own pace and make your own mistakes. It’s easy to blame someone when your investments have gone wrong rather than to take the blame of your own wrong decision. (if your looking for good Fund Managers look for managers who have most of their own personal investment in that fund and so that they are not managing the fund just for the sake of managing the fund and making management fees but instead are looking to make some gains for themselves and for the investors).
4. Investing is a get Rich quick strategy: Everyone wants to buy that one stock which is going to go all the way up and never come down and want to get rich off the ONE investment. Let me be realistic, odds of an investor picking that particular investment is as high as you winning a lottery and even if you pick that stock you would be cashing it in too soon. Therefore, invest based on a good risk-reward strategy, apply it again and again. Investing is a marathon not a 100m dash.
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