10 Mistakes Every Investor Makes & How to Avoid Them
Mistake #8 – Improperly Valuing Investments
Just because a market takes a sudden dip doesn’t mean the
investment is all of a sudden a bargain buy. This goes for both real
estate and equities markets.
Stocks, for example, have been on a bull run since 2002, but at the
end of 2007 and the start of 2008 a great deal of volatility occurred.
Technology stocks, among others, took a beating. While technology
stocks have significantly decreased at the time this special report
was published, they are cheap relative to where they were a year
ago. This does not necessarily make them a no-risk investment.
Cheap stocks can always get cheaper. There is still plenty of room
for these stocks to fall in order to be rationally valued.
Just remember that because there is some instability in the market,
that doesn’t mean it serves as an immediate buying opportunity for
cheap stocks. It would, however, be worth determining a suitable
entry point and keeping a close eye on, but don’t jump in just
because prices are down from yesterday’s highs.
Secondly, past performance should not be an indicator of future
performance when picking stocks or mutual funds. While a history of
providing shareholders with great returns is an important factor when
selecting equities, it by no means guarantees future results.
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