Trading Skills| Invesing Wisdom
Hello everyone! Today i want to share some trading skills with you!
"Everyone is trying to be smart, I'm just trying NOT to be stupid."
- Charlie Munger
Here are the 10 MOST COMMON investing mistakes to avoid like the plague (visually):
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1. Short-term focus
New investors are fooled by market randomness.
Stock UP? “I’m a genius.”
Stock DOWN? “Investing is impossible.”
Experienced investors know that returns are measured in YEARS, not DAYS
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2: Ignoring personal finance
New investors think that buying stocks will FIX their personal finances.
Experienced investors don't invest until their personal finances are rock-solid.
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3: Going “all in” one 1-stock
New investors are blinded by the upside. They think that they “can’t lose” and over-allocate to a single position.
Experienced investors know the real odds of success are like a dice roll, and there is no such thing as a "can't lose" stock.
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4: Not doing any research
New investors buy stocks without doing any research.
(Many don’t even know HOW to do research.)
Experienced investors know that research builds the conviction to hold through the inevitable downturn.
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5: Not having a process
New investors buy and sell whatever stocks are popular.
Experienced investors focus on their investment process and only buy what fits their criteria.
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6: Watching the stock, not the business
New investors focus on price movements, checking stock prices multiple times per day.
Experienced investors focus on earnings reports and the company's intrinsic value.
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7: Selling winners to buy losers
New investors sell their winners and double down on their losers.
Experienced investors sell their losers to double down on their winners.
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8: Over-confidence
New investors are filled with confidence
Experienced investors know that the more they learn, the more they realize they don’t know.
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9: Overusing the P/E ratio
New investors only use the P/E ratio to make valuation decisions.
Experienced investors know that the P/E ratio has HUGE flaws and only use it when a company is optimized for earnings (phase 5).
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10: Using options, margin, & leverage
New investors use options, margin, and leveraged ETFs to boost their returns, unaware of the downside of doing so.
Experienced investors know this is a recipe for disaster and keep Buffett's quote top of mind:
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
