Trying to catch the bottom in a falling market is the most common mistake investors make.
The stock market has seen a sharp correction over the past month, making investors anxious and jittery.
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1.) Trying to catch the bottom:
In a falling market, no one knows what the exact top or bottom will be. Hence, instead of trying to predict the bottom,
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When stocks go into a tailspin, investors start devouring investment news and research reports. However, they also seek information or signals which support their beliefs and tend to ignore data that refutes their original thesis.
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Patience is one of the keys to success in the stock market. The only thing that you need to do in the stock market is to buy good stocks and give them time to grow. However, most people who lose money in the stock market are those that do not have patience.
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It is usually during a bear market that investors try to change their investment strategy overwhelmed by panic. This undermines the long-term strategy which will slow down the pace of achieve one’s financial objective.
5.) Obsessing over markets:
Investors have access to 24 hours of endless stock market media coverage.
6.) Increasing margin bets:
Margin investing and leverage can yield high returns, but also lead to big losses.
Some investors may try to reduce their risk by spreading their money across too many instruments, sectors, or even companies within a sector at once. Sure, this will help you temporarily limit the downside and cushion your overall portfolio, however, ....
8.) Getting caught in a value trap:
Value trap implies getting trapped in a stock whose price seemed very attractive when you invested, but it continues to remain low for a long period of time, ...
9.) Emotions clouding judgement:
The first thing which people do when they face a loss is increase their lot size for quick recovery.
10.) Buying stocks that buck the trend: In a bear market, there will always be stocks that move in the opposite direction.
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