The Worst Mistakes Beginner Investors Make

You’d be surprised how many are making it near impossible to find success.

That’s because they try a million different things.  They get far too wrapped up with too many ideas.  And they lose track of one of the best ways to make money today.

Unbelievably, an astonishing nine out of every 10 investors fail because:

  1. Many don’t have good training, or guidance
  2. They’re not aware of risk, thinking the stock market is a “get rich” scheme
  3. They don’t think long-term.  They want instant gratification.
  4. They blindly follow the crowd, becoming one of the sheep
  5. They fail to trade without emotion.

That’s a great way to lose money.

However, to truly achieve success, you must avoid the top mistakes we mentioned above.

Some of the other top mistakes include:

Top Mistake No. 1 – Beginners Listen too Much to the Press

One of the worst things many investors – especially new ones do – is they get caught up in what the press hounds would have them believe.  They listen to every word of CNBC, or buy and sell based on Jim Cramer’s buzzer.

But that’s a great way to lose money.

Everyone in conventional financial media shouts about their favorite stock picks.

But we believe that if you really want to become a better investor then you need to be looking at where the smart money is heading.  You need to understand what is truly driving the markets and how you can take advantage of these moves as – and before – they hit the mainstream.

Top Mistake No. 2 – Beginners Sell in Panic Mode

Market chaos will always exist, but don’t allow it to scare you out of the stock market. Sit tight and remember that the markets are resilient. Once the panic recedes, buying opportunities can be found in the rubble, especially as the economy remains strong.

Sir John Templeton advises that you buy “excessive pessimism.”

Warren Buffett advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.” And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.”

One of the greatest examples was his stake in shares of The Washington Post.  Shares may have plummeted in the bear market of 1973-74, but the billionaire still saw value, buying and watching his take explode more than 100 times over.

Investing legend Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.”

In short, the last thing you want to do in a pullback is panic. Simply wait it out, and remain calm. Investing accordingly, and calmly.

Top Mistake No. 3 — You Don’t Have a Trading Plan

Do you know when to exit on an up or down move?  What stop losses or trailing stop losses do you have in place? Know these things, and set a plan so you won’t run into “crash and burn” scenarios as often as those with no plan.  Pros know when to just walk away from a trade. Remember, stocks don’t just move up.  They also come down.