- Not following an investment objective when you build a portfolio...
You need a plan and you need to commit it to paper. I don't think it has to be a book, maybe just a few principles that you will follow. Are you investing for the long-term or do you expect quick gains? What Return on Investment do you expect? Do you favor certain industry sectors or do you want to diversify?
- Not researching a stock before you buy...
How profitable is the company? What are the earnings expectations for the stock? How does the company stack up against competitors? If you skip the research phase, how can you believe in your investment? You can get a wealth of information on the internet, and its free! Invest a little time and you will be more committed to your decision. Check out: Stock Research
- Buying the hot stocks of the day...
In my opinion, this is the biggest problem investors face. When you pick the hot stock of the day, chances are good that you are paying top dollar for stocks that the big money is about to dump. Following the masses is rarely the way to wise investments.
- Believing that you can pick stock highs and lows...
If you get caught up in this game, you are a stock trader and not a stock investor. If you really want to be a stock trader, try the futures market. You get leverage and if you are right, you make big money. Be cautious about this choice. Do you know many people who have accumulated wealth in the futures game? Probably not. Do you know many people who have accumulated wealth by investing in stock? You probably do, maybe even your next door neighbor.
- Keeping stocks that have lost value until you regain your losses...
This is a longer-term question. When you add a stock to your portfolio, give it some time before you make this evaluation. If the stock is a loser longer-term, you made a bad purchase decision. Don't get married to the decision. Your underlying goal in stock investing is to make money, not be right on every stock decision you make. If you think "stock portfolio" rather than individual stock, you can avoid this trap. Maximize your portfolio! if you have a losing stock, sell it.
- Taking profits early on stocks that have made you money...
Huh? You made a winning stock decision and you want to sell it now? This is a traders' mentality. Sure you get a little quick profit but you kill the future potential of a winner. The stock value is growing because the smart money sees a rosy future. Stick with winners!!!
