Investing for beginners; mistakes to avoid if you want to win
Stock investing for beginners; mistakes to avoid if you want to win

Stock investing for beginners; mistakes to avoid if you want to win

Stock investing for dummies; avoid these common mistakes

Stock Investing for dummies

A loss can be viewed as a liability or as an inspiration to recover and gain twice as much. Sol Palha

Investing for beginners

We are going to cover some of the most common stock investment mistakes that are egregiously committed by the novice investor, and even at times by the so-called professional investor.

Novice market players confuse the term stock market trading, with stock market investing. Then you have investors who confuse the term long-term investing with the concept of buy and hold; there is nothing one should buy and hold forever if you do so the concept should be called buy and fold. This is probably one of the most common investment mistakes of all time. There is a time to buy, there is a time to hold, and then there is a time to fold.

Investors look for trends, novices look to trade without determining the trend

Investors look for trends, novices look to trade without determining the trend 

The Investor looks for a trend and buys early in the trend; he/she then rides the trend until it ends. One should learn the basics of trend analysis as it will help one determine when a new trend is about to start.  Now let’s go back to the topic of Trading vs. investing.

Stock market traders look for rapid short-term gains; they prefer to extract the maximum profit they can from stock, option, future, etc. At least that’s the concept behind trading. Unfortunately, most traders end up losing more than they win, and even when they do win, they usually end up making less than the long-term investor.

A few traders do extremely well; these chaps fall into the 2% category of overall players. Their gains are huge, but for the rest of the players, a loss is all the can hope to look forward to. The investor, on the other hand, looks for a new trend and usually tries to get in right at the beginning of the trend. If he/she is more aggressive, they try to get in when that particular market is putting in a bottom and has been trending sideways for some time, indicating that the worst is behind.

Investing for beginners 101;  Don’t confuse long Term with buy & hold

Stock investing for dummies;  Don't confuse long Term with buy & hold

Another error that is often made is to confuse long-term investing with the rather falsely promoted policy of buy and hold long-term investing is getting in early and selling when the trend is over. A classic example was the Internet mania of the 1990’s.

The time to buy was in 1995 and 1996 and the time to sell was late 1999 and early 2000 when many of the Internet stocks started violating their main up trend lines. Those that bought the buy and hold lie, found themselves even poorer than when they took initial positions in these stocks.

A more recent example was the housing bust and mortgage crisis that rocked the financial sector and produced a massive crash.   The right time to get into housing was from 1999 to  2006.  Yes, the Market did overshoot but buying after 2006 was simply not a smart idea.  From 2006 onwards, the smart player was selling into strength, such that by 2007 he virtually had no position in real estate.

Trend Analysis, mass psychology and technical analysis would have kept you on the right side.

Mass Psychology and Stock Markets

We advised our subscribers to bail out long before the housing market topped out.  The same holds true for the internet bubble. On the same token, we got our subscribers into the commodity bull well before the market started to explode. For example, we closed out our Silver positions for over 1000% in gains and Gold and Palladium positions for gains in excess of 700%.

We are only referring to Bullion gains and not the gains we locked in many of our stock positions. We have now come up with the most advanced tool we have ever developed and this tool would have produced even larger gains, were we in a position to use it earlier.   This tool is so effective that since its inception it has an accuracy of over 95%.  For more information click here Trend Indicator. 

 Contrarian Investing Essential Part of Stock Investing for beginners PlayBook

Contrarian Investing No 5: Portfolio Management

A very important concept one should learn when one seeks to enter the Stock Market is the art of being a contrarian. In short, a contrarian investor does something that is totally the opposite of what the crowd is doing.  The Tactical Investor has always been known for taking extreme contrarian views. Sometimes even contrarians have a hard time digesting some of our views.

Buy when the masses Panic and sell when the masses are ecstatic.

Investing for beginners Guide States that Portfolio Management is key to success

Portfolio management separates the stock market winner from the stock market losers. It is one of the most important and most neglected areas when it comes to investing. Many a trader or investor who could have otherwise been successful ends up losing year after year.

These common stock investment mistakes could cost you a fortune, so take a little time out to make sure that you have a plan in place. It could make the difference between hitting the home run or losing your home.

Other Articles of Interest

Is The U.S.A Still A Super Power? (Oct 25)

China; A Great Time To Buy (Oct 25)

Not Time To Short The Markets Yet As Long-Term Trend Still Intact (Oct 24)

Dollar Bull Still In Play  (Oct 24)

Market Trend is up, and all pullbacks are buying opportunities (Oct 2)

Gold Approaching Critical Juncture (Sept 30)

Copper at make or break point  (Sept 27)

A New Era In Trading (Jan 25, 2014)

 

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