How they lost their Rolls Royce in Wall Street? A Counsel on 20 Deadly Investment Mistakes

Article written by Sherin Dev. Follow me in Twitter

Warren Buffet once quoted, “Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway”. Investors who able to understand the real inner meanings of this simple quote, would stop any investing activities immediatly and start to acquire real knowledge and wisdom to become a successful investor. Investment wisdom is not only acquiring necessory knowledge to make successful investment decisions, but also meant learn and avoid severe investment mistakes. Buffett’s quote indirectly pointing it’s fingures to the foolish investors who are really ignorant on what they are doing.

Let me ask, “Do you have any history of money loses from stock market investing?” or “Did you studied about all the common investment mistakes investors commit regularly while investing?” If your answer is ‘negative to any of these questions, this article will solve your problem. Firstly, these are a well prepared list of top 20 common investment mistakes generally investors makes all over the world and a warning to avoid these mistakes when investing your money to stocks and stock markets. Secondly, if you have any history of money lose from stock investment you had made, I am sure, reading this list would help you to find the mistake you have been committed and caused money lose!

Here is the complete list of common investment mistakes:

  • 1. Start investing without self assessment on readiness and right goals
  • 2. Thinking and approaching stock market with full of greed to become super rich overnight.
  • 3. Considering stock investment as a part time job or hobby or a place to test luck
  • 4. Starts without acquiring proper knowledge on investing, stock market, risk and returns
  • 5. Taking investment decisions with lack of knowledge on where, when, how much to invest
  • 6. Investments on company stocks without studying about their business, management, financial status
  • 7. Investment on companies with high debt, low or no Return on Equity, Negative Cash flow and operating in highly competitive sectors
  • 8. Follows the activities of public, fellow traders, colleagues, big investors
  • 9. Makes any investments on market rumors, analyst reports, hot tips, broker recommendations
  • 10. Entering to the stock market as a short term trader, intraday trader, speculator
  • 11. Investments without proper study, research, references on the business economics, market time and risk-return possibility
  • 12. Not having necessary investor qualities of patience, prudence and having disadvantages like being panic on stock market volatility
  • 13. Less diversification by putting huge money to a or two businesses or over diversification by investing little money to number of stocks
  • 14. Investing on businesses that are unknown and/or investing on franchise model businesses, commodity businesses who have huge competitors, high debt and less or no returns
  • 15. Panic selling of a good stock in a down market or buying a bad stock in an up market, by greed
  • 16. Large investments on penny stocks and micro cap stocks
  • 17. Making investments with borrowed money as loan from banks, financial institutions or from friends and relatives
  • 18. Making investments relying on stock screener, charts, technical analysis data, candle sticks which doesn’t able to expose the real fundamentals of a company than its past trading information and volatility
  • 19. Not having proper knowledge on when to sell a good stock and when to throw a bad stock
  • 20. Finally, forgetting the truth of ‘start investments early’, but makes investments largely just before the retirement.

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