Mistakes of the average investor

Hi all,

What do you feel are the most common mistakes of the average investor?

I'll share a couple which are very common in my opinion:

1. Tends to become grossly overconfident
2. Trades too much at great cost

Looking forwared to reading your replies.

I think one of the great mistakes is that investors become "married" to their stocks, or they treat them as children. They are not blood relatives -- it is OK to sell them. It is OK to dump them.

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Originally Posted by Alan Mendelson

I think one of the great mistakes is that investors become "married" to their stocks, or they treat them as children. They are not blood relatives -- it is OK to sell them. It is OK to dump them.

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Absolutely Alan. Luckily, when I "divorced" from my first investment in a company stock I actually made a profit. Today I prefer to invest in Index Funds.

Here's another common mistake:

To make irrational buy and sell decisions. To benefit from compount interest you need to stay the course and go for the long run.

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Originally Posted by buyingstocks

you need to stay the course and go for the long run.

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I disagree. There is no reason to hold on to an investment that is not performing or even failing. There is no reason not to sell when it's the time to sell.

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Originally Posted by Alan Mendelson

I disagree. There is no reason to hold on to an investment that is not performing or even failing. There is no reason not to sell when it's the time to sell.

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I see what you mean Alan. What I meant was to not overract to the mood of the market. It can go up and down and holding a long term position, the overall risk can be reduced. And the overall investment should be well-diversified.