A few words by Dr. S. Kevin on the common errors by investors

Sunday, February 10, 2008

A few words by Dr. S. Kevin on the common errors by investors

1. Investing without knowing the basics

Even though the investor relies on the broker for his investments, he should know the basics of investing. Investing without knowledge will be more risky.

2. Relying on past performance

The investor invests in a company based on its past performance. As investment is a future oriented activity, one should not rely only on the past performance.

3. No diversification

Investing everything on a single company or some star performers is very risky. Always invest in diverse stocks across diverse sectors.

4. Selling winners and keeping losers

The common mistake everyone makes. Due to emotional attachment and fear of losing money, people won’t sell off the low performers even though the net position becomes weak.

5. Investing without goals

Without goals the investor will not know when to sell. The share prices may go up, but investor waits for more till the prices come down.

6. Selling during correction

People panic and sell off during corrections instead of buying.

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