| Don't lose money. Billionaire investor Warren | | | | sheer emotional attachment could lead to huge |
| Buffett himself has coined this popular mantra of | | | | losses. If your stocks have been on a consistent |
| the investment world. That's easier said than done | | | | low and there are signs of trouble in the |
| of course, considering the amount of risks | | | | company, then be willing to sell even if it hurts. |
| involved when trading in the stock market. Even | | | | Remember: you buy stocks to make money; |
| seasoned investors have sustained losses at one | | | | you're not supposed to marry them. |
| time or another. However, by avoiding the | | | | 3. Putting all your eggs in one basket. You are not |
| following common investing pitfalls, you can | | | | afraid of taking risks but you also don't want to |
| minimize your losses and gain profits from your | | | | end up penniless. Then your favorite word should |
| investments. | | | | be diversification. In building up your stock |
| 1. Putting your money on something you don't | | | | portfolio, be sure to acquire stocks from all major |
| understand. So you've heard that your neighbor | | | | sectors such as property, industry, financial, oil, |
| just had his house remodeled with the profits he | | | | and services. That way, you prevent your entire |
| made from the stock market. You want your | | | | investment from going down the drain in case |
| own share of the pie too so you hastily purchase | | | | one sector takes a nosedive. A good rule is to |
| stocks of the first company you saw on the | | | | limit an investment to 10 percent of your |
| gainers list. It would have been funny if you were | | | | portfolio. |
| Homer Simpson but in reality, you have just | | | | 4. Aiming for a turnover overload. The stock |
| made a very unwise decision. Before buying | | | | market is no place for impulsive buying (and |
| stocks in a company, you should first have a | | | | selling). If you're into the habit of buying stocks |
| clear understanding of its business model and | | | | and selling them after a short period of time with |
| financial history. The stability of the sector it | | | | little or no gains to show for it, then your broker |
| belongs to should also be taken into consideration. | | | | must be filthy rich with commissions by now. |
| Even good companies with solid businesses could | | | | Keep in mind that each trade comes with |
| suffer from a nasty devaluation if its sector is in | | | | transaction costs and taxes. If you're not careful, |
| trouble. | | | | then what profits you have could be easily wiped |
| 2. Becoming emotionally attached to your stocks. | | | | out by the accompanying costs of your high |
| It's tempting to hold on to your stocks even | | | | turnover. You could also miss out on the possible |
| when sound financial reasoning tells you to sell | | | | gains of your investment in the long run. |
| them. After all, you've already spent so much | | | | Knowing the possible errors in stock investment is |
| time and effort poring over pages of market | | | | already a step ahead for you. There are still a |
| reports and corporate information until you finally | | | | thousand and one pitfalls out there that you may |
| found the ideal company you want to invest on. | | | | stumble upon but the important thing is to learn |
| You also want to prove that you made the right | | | | as you go along. After all, even billionaire investors |
| decision in choosing that company. However, | | | | make mistakes too. |
| holding on too long to your stocks because of | | | | |