In investing, what is comfortable is rarely profitable,” said Robert Arnott, an American investor who advises on investments of over $200 billion. When volatility surges, people often want to know about future stock prices. They want to know when the market valuation would get comfortable for them to buy or sell. They also want to assess the risk involved in making a move at that time. But there’s another risk that is rarely spoken of, or acknowledged by investors—an investor’s own thoughts and behaviour.
This often causes more harm. After all, you can ride stock market’s volatility by buying and holding for the long term (assuming you purchased a good stock). But how can you avoid the risk of poor decisions? These are, after all, finite and cannot be changed. Here are a few of the common mistakes that I have noticed investors make:
