Where 'Far Too Many' Investor’s Go Wrong, IMO…
These aren’t rules, facts or anything definitive; just some of the many opinions I’ve built over nearly 30yrs of stock investing. Take em' or leave em', it's all good to me because they're accurate. 🤷♂️
Here goes, in no particular order. Far too many investors…
… have a gambling mentality when it comes to investing.
... focus on where a stock once traded to determine 'fair value’.
... think their pain threshold for unrealized losses is far higher than reality.
... risk far too much for a potentially very small win.
... create a lot of bad habits during bull markets.
... fail to acknowledge mistakes, so they fail to learn from them.
... under-estimate how can be lost going all-in on high or no P/E growth.
... rely on 'wishful thinking' over an actual 'investment thesis'.
... ignore anything negative about their stocks due to confirmation bias.
... will jump into day trading and/or margin usage at worst possible times.
... make blindly 'buying the dip' they're primary investing strategy.
... consider bullish "what-ifs" , while ignoring bearish "what-ifs".
… equate every bit of news as a catalyst, while it's just ‘business as usual’.
.*. spend too much time on small positions & not enough on large positions.
.*. fall prey to "how much lower can it go" thinking, and later learn A LOT!
... underestimate 'company specific risk' and invest too much in one stock.
... worry about how they rank against others instead of focusing on self.
… don’t understand what ‘the market is forward looking’ truly means.
... fail to factor 'we don't know what we don't know' in investment thesis.
... confuse getting lucky with having a sound investment thesis.
... will eventually get kicked in the throat by an unexpected margin call.
.*. own too many individual stocks complicating things for no reason.
… don’t spend enough time trying to break their bullish investment thesis.
… scream "manipulation", when wrong about their favorite stock.
... spend too much time on social media telling others their stocks are best.
... think 'time in the market' guarantees profits, which isn't true for stocks.
... fall for recency bias when projecting future returns.
… think they know more about a stock/company, than they actually do.
... sell their winners early and hold their losers indefinitely.
... willingly pay high expenses on ETFs that don't deliver.
.*. happily DCA to lower cost basis, but won't do it to raise cost basis.
... turn a blind eye to dilution from rampant share issuance.
... ignore importance of long-term diversification.
... assume any ETF or mutual fund is safer than a stock.
.*. get caught up believing the hype of a highly speculative stock.
... don't bother researching balance sheet & other key metrics..
... under-estimate what's needed to retire 'comfortably', incl. fire/coast fire.
.*. over-estimate what's needed to retire 'comfortably' (opposite of above).
... are far too quick to give advice while being ill-equipped to do so.
... over-estimate their true returns by failing to offset deposits.
... get cocky during bear markets & ultimately lose years of gains because of it.
I think I've shared something similar to this in the past, so if I'm being honest, not really sure why I'm sharing... As with most of my posts, it's likely driven by what I'm seeing in my Blossom feed.
And full disclosure, I've been guilty of a few of these (.*.) myself. Maybe you're guilty of some too.
** Wanted or not, I'll add to this list as more come to mind. **
