Things You Should Never Do As an Investor

Never Listen to Friends’ “Insider News”

As an investor, you should never follow your advice from your friends who claim to have “Insider News”. Why?

Firstly, you do not know how accurate his information is. He could have been misguided by another friend of his who also claims to have “Insider News”. It would not have been “Insider News” when you and your friend have nothing to do with the business.

Secondly, there are no such things as “insider news”, because it is against the law for the management of the company to divulge any non-public information.

Thirdly, as a professional investor, you should NOT invest based on rumour. Knowledge is wealth, ignorant is poverty.

Never Listen to “Experts or Gurus”

Those so called experts are just like us, they can be wrong. In fact, they are wrong most of the time. But if they are the real experts, they would know what to react if things go the other way round, and still make profit out of it (Hedging). But the experts would not openly admit their mistakes and say they are wrong. If you follow their advice and got hit badly, then who is to blame?

Don’t Believe What You Read In The News

News are created for the sole purpose of keeping the readers entertain. Journalist will always think of creative headlines to attract the readers, and they will make the fact & figures sound either very bullish or bearish. How many times have you read things like:

  • The market reached X months high.
  • A Major Pullback Is Expected
  • Economy Is Slowing Down Due to……..
  • ….. Signal Recession

By then you react to the news, you are already on the other side of the trade.

Never Put All Your Money Into One Stock

Putting all your money into one basket is like taking a bet, what if you are wrong and the share price go the other way, and you lost almost all your money?

Remember, no one can predict the market.

Never Buy Low And Think You Can Sell High Without Doing Thorough Research

There is always a good reason why the stock price is getting lower and lower. Buying lower, it might get even lower. By the time it gone up, you would have lost all your confidence and want to get out as soon as possible. So after spending months or even years constipating with the stock, you did not even make any money!

Always do your research and follow your rules. If you are confident with the company, set a target buy price, set a cut loss target, set a target sell price. Don’t be greedy when it is making money, don’t be stubborn when you are losing money and not cutting your losses.

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2 Responses to Things You Should Never Do As an Investor

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