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What's the worst error an investor can make?
I'm compiling research for a book on investing mistakes.
Blindly trusting others
@jensen Are you referring to executives, fund managers, or both?
@jensen good call. I’d say FOMO
@valuabl neither really actually haha but good Q. I was more referring to trusting investment advice and therefore trades from other retail i.e that person (debatably even real) you follow on Twitter because they nailed one trade one time. This behavior is then typically followed by joining a discord with trade alerts just to play a game for a thrill with a blindfold on. Playing that way is a blatant recipe for a disaster.
It’s the equivalent of following a handicapper in sports betting who boasts edge with some “model.” It’s self fulfilling- you can blame and not take accountability when wrong, and falsely attribute their luck for your astute judgement when right
This is why I love Commonstock so much more for info on markets bc of the integrity behind vast majority of the content on here. And fruitful discussions that come thereafter too.
Not doing any research would be my answer if you’re including errors of omission. In terms of actions I would say that would lead to the error of investing in “hot” or “trendy” stocks, momentum factor stocks, without understanding what’s moving the price of the stock. I feel like that’s what gets people in trouble the most often, the most quickly, and the most precipitously.
I’m more focused on the psychology side and there are a few things that come to mind:
- I agree with @jensen on blind follows
- Going “all in” on one idea when first starting
- Unrealistic expectations of “starting on top” and being successful from the start
Having unclear investing goals and like @jensen said hoping on every hot trend without research.
Being inconsistent in your trading.
@shaggyrs6 cannot be understated. People are often their own worst enemy. It’s why index investing always prevails (long term) 😄
All the ones listed are great. How about not starting? Analysis paralysis or just plain fear and never start investing?
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