7 Biggest Mistakes Investors Make
Six: Fighting the market’s trend.
This one goes along with the idea of selling. When the market is trending
higher, it’s the right time to be looking for stocks making fresh run-ups.
But when the indexes are selling off, chances are, any individual stock you
own will also head south. In many cases, the best thing you can do is sell
your stock in the downtrend (as we saw above). Focus your buying on times
when the market itself is moving higher.
Sounds simple, right. Buy in an uptrend, be ready to sell in a downturn. But
how do you know the general trend of the market? It’s actually pretty
simple to determine, by watching whether or not the major indexes are
moving up or down over the course of several days or weeks. You also
have to check the trading volume on days when the indexes make
Because the majority of stocks move in the same direction as the general
market, it’s absolutely crucial to time your buying and selling to the way the
indexes are trending.
That’s exactly how we were able to maintain the value of my stock
portfolio in the 2008 and 2009 bear market. We sold all our shares before
the market tanked, and didn’t lose my money. There was nothing magical or
lucky about it – we simply timed our selling to go with the market’s flow.
If used properly, tracking the indexes’ selloffs and upside reversals reliably
identifies market peaks and valleys. So why don’t more people use that
Seven Biggest Mistakes Investors Make