Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Golfers Make This Tragic Mistake… And So Do Investors

InvestorEducation / Learning to Invest Mar 29, 2013 - 05:30 PM GMT

By: Investment_U

InvestorEducation

Alexander Green writes: Watch an amateur golfer miss a putt and you will see two frequent errors.

The first is that the putt will finish on the low side of the hole. (That’s golf slang for saying the ball broke more than the putter was anticipating.) Statisticians say it’s the reason for nearly two-thirds of amateur golfers’ missed putts.


However, the second error is the really dumb one. That’s when the putter turns away in agony as the putt runs by the hole and in doing so doesn’t see the exact break the ball will make on the way back. It’s why you see so many amateur three putts. Or, worse, four putts. (Asked once how he managed to four-putt a green, Spaniard Seve Ballesteros replied, “I mees. I mees. I mees again. I make.”)

Investors often make the same kind of mental errors. It’s called not learning from your mistakes.

Just as an experienced golfer learns to play a bit more break and watch intently when the ball misses, a good investor has to learn why certain trades don’t work and why – and then adjust accordingly.

For example, back when I was a money manager, I met a man who complained that he couldn’t understand why he lost money on so many stocks. But when I took a look at his portfolio, the reason was obvious. He liked to buy very low-priced shares.

“It’s easier for a one-dollar stock to go to two dollars,” he said, “than for a fifty-dollar stock to go to a hundred.”

That might sound reasonable to some folks but the fact is it simply isn’t true. Mountains of research have shown that the best-performing stocks over the past 100 years have sold for more than $15 a share. This gentleman was unaware of this – and kept making the same mistake, buying essentially penny shares of young, unprofitable companies and then taking a bath over and over again.

Once he quit doing this, he had no trouble making money in the stock market.

Other investors make different habitual errors. They are too eager to take profits or too reluctant to cut losses. They tend to invest when they feel optimistic and sell when they feel pessimistic. (A great way to buy high and sell low.)

They concentrate their investments in only one sector, like energy, gold or technology. Or they put too much money in individual positions. Many investors, for instance, will divide their portfolio among five stocks, putting 20% in each. That’s not enough diversification and a single loser can punch a big hole in your portfolio.

Most investors think the only good thing about a losing trade is they can use it to offset a winner for tax purposes. But, in truth, the real value is in learning what not to do and why.

So review all your past trades for commonalities. See what you did right. But make sure too that you understand what you did wrong. It may feel like a painful process but it helps you avoid future pain.

It’s how smart investors get richer.

Good Investing,

Alex

Editor’s Note: As you can probably tell by today’s essay, Alex is an avid golfer. And a few months ago, our publisher met Alex for a round at Doral’s Great White Course. It was here that Alex revealed one of his most golden investment secrets – one he’s used to earn gains of 290%, 335.71%, and 488.89%. And our publishers decided to find a way to bring this strategy to a select group of our daily readers.

I’ll warn you though, this isn’t for everyone. To learn more, click here.

Source : http://www.investmentu.com/2013/March/golfers-make-this-tragic-mistake-and-so-do-investors.html

by Alexander Green , Oxford Club Investment Director Chairman, Investment

http://www.investmentu.com

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in