Common Mistakes of Equity Investors

Equity investment is an attractive investment ,but it also possess some risk factors. Investors have to think before investing in equities, as there are chances to lose money in stock market by their own mistakes. Some investors wants to accumulate wealth too quickly, so they keep looking for tips and often resort to assumptions ,they makes loss in their investment. Lets discuss some of them.

Following are the common mistakes by the investors while investing in the stock market.

1) The Market Timing

Timing the market or predicting the feature price is dangerous thing in investing. Many greatest investors ,who have a strong view on the price levels appropriate to individual shares does not try to time the stock market.Stock prices do not always move for the most logical or easily predicable way . An unexpected event can send a stock’s price up or down, hence trying to time the market is inappropriate.

2)Following Heard Tips

Some Investors makes decisions based on learning from the information of others. When investing under conditions of risk, investors experience enormous pressures ,it challenges or stresses their sense of self and lead them to the direction of the heard. Occasionally it seems to be beneficial. But sometime it may go wrong and would bring in losses.

3) Relying on Tips

When you make an investment, it’s important to do your own research and analysis of any company before you even consider investing your hard earned money. Relying on the advises of others may lead to a disaster.

4)Putting all eggs in one basket

Some Investors put all money in one or few stocks, it increases the chance of loosing their money .But spreading your money among different investment is a good way to reduce risk. By picking the right group of investments, you may be able to limit your losses. Diversification does not mean that you will make money; it just reduces the risk of loss. You can loose money in the stock market faster than any other investment, this risk gets reduced by diversifying your portfolio. By Diversification we mean diversifying your investment as cash, stocks, and mutual funds etc.Diversification gives maximum advantage to the investor. It protect you against downturns.

5)Fear And Greed

Many Investors are driven by fear and greed .Greed is responsible for driving stock price up and fear is responsible for dripping them down.The investors ,who wants to get rich quickly start buying shares without doing any research or knowing anything about the company. When greed is at work, they are less bothered about risk involved in it.When markets hit their top and start coming down, these same investors will hold on hoping and believes that the market will come back, Greed drives them forward. As the markets drop further, Fear slowly works and they decide to sell and get out.

6)Lack of research

Success comes through hard work, therefore market research is very essential before investing in stock market. Many investors invest in stocks on the sayings of the brokers or financial advisors but, a smart and wise investor would never do so. He would probably search the company’s potential and do the market research before doing any investment.

7)Invest without Patience and Discipline

Invest management is a skill. Investment requires market study, planning and hard working. It also needs patience and discipline. Discipline means that you make a plan before investing , have a line of attack, follow your own rules. Patience refers to undertake all the groundwork to pick the right stocks.

Having Unrealistic Expectation

All investors hops best from their investment.But greed for higher returns is not good.It will lead to bad investment performance.Some times the stock generates a good percentage of returns during the great bull run. Always the look for same is not possible .

I have outlined most of them I think if you feel that you have a point to make please comment and we can discuss further. Comments and Suggestions Welcome

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