Psychologically, most novice investors made a common mistake after losing heavily on shares investment by falling into the temptation of 'averaging mentality' to buy back more of the same high-risk, high P/E shares or worthless stocks which they losses. This mentality of taking back all their losses are not much different from gambling mentality to make bigger bets. Stock investment is not about gambling. Gambling is short term whereas shares investment is long term.
Nothing is further from the fact, history has told us that even several experience traders took a plunge with getting further into bigger losses and getting into bigger troubles. Have we not heard of that? How much more can it happens to novice or inexperience investors?
Always remember this tip when taking a loss:
Small losses allow you to remain investing and learning, whereas larger losses can seriously hamper your investment when next opportunity arises.
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