Generally people make the same mistakes when investing, below are the most common.
Take 10 minutes to assess yourself; it could be the most cost effective 10 minutes of your life.
1. Forecasting – investors seem to focus on the forecasted projections of the business, being revenue, sales growth, increase in earnings etc. Generally as a whole humans are optimistic when it comes to the future as such forecasts are generally over stated.
2. Information – the more information you have generally leads to the investor becoming over confident rather than making a better decision. We are generally looking for information which will prove us right not information which will prove us wrong.
3. Meetings – as a species we are generally poor at spotting a lie, the more we meet with the sales person or company management the more we are building an emotional relationship as opposed to a business one.
4. Timing – all investors want to buy at the bottom and sell at the top. It makes sense, but it is impossible to do this consistently.
5. Short Time Frames – in modern society we are always looking at returns over months, weeks, or days. As a consequence we change our investment focus too often; this is more speculation than investing.
6. Stories – we are hardwired to accept stories. Never let the facts get in the way of a good story. Investors would do better to look at the facts not the promises.
7. Group Interactions – we generally consider that if a group agrees they must be right. Majority rules is generally accepted amongst a democratic society so it is no wonder we discuss our investment decisions as a group so we can feel better about the result. In fact a group will general amplify rather than alleviate the problems of making a decision.
Be honest with yourself, how did you score? No one is watching over your shoulder and I certainly do not want to know your result. So be honest and see if you are making any of these mistakes.
Admittance of a mistake is the first step to making sure you do not make the same mistake in the future.
Need help... please call me on (07) 4771 4577.