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7 Common Investment Mistakes to Avoid

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7 common investment mistakes to avoid BY Al and Mark Rosen September 11, 2014 Everyone’s guilty of investment mistakes. Here are seven of the most common blunders to stay away from: 1. Falling in love with the story If you fall for the story behind a company, or its product, you may not see fundamental flaws, poor market conditions, or overpricing of the stock. Marketing experts agree the best sales job is achieved through telling a story and not by talking numbers and facts. Stories get you emotionally invested, far beyond what plain facts could ever do. 2. Believing things are different this time Believing you stumbled on something new or different in the investment world can get you in trouble. Simply put, it’s never different. …show more content…

A yield over 7% in this market tends to be a warning sign. A few extra points of yield earned over a year can disappear in minutes when negated by a capital loss. 5. Doubling down Doubling down is when you’re determined to breakeven on a particular investment. When a stock takes a hit because of bad news, you have with two choices: sell the name because more bad news may be coming, or double up on the number of shares owned so that even a halfway rebound will bring the investment back to par. This is pure psychology at work. There is almost always a better investment alternative than doubling down. 6. Focusing on the near term There are plenty of reasons to focus too much on the near term. The vast majority of investment research is based on a 12-month outlook, and portfolio performance is measured on a quarterly, if not monthly, basis. It would be fair to say that because of this, getting the timing right is half the challenge when it comes to investing. Nevertheless, there are times when quality stocks get beaten down by the market for various reasons. All you need is a patient hand. 7. Riding winners too long Holding winning stocks for too long can be just as costly as sticking with losers. The best way to avoid losing a huge paper gain is to sell gradually on the way up. It’s hard to argue against booking gains, but the psychological hold can be strong. A set approach to selling a

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