Mistakes you should avoid while investing in the Stock Market

I have been investing in the market and analyzing investor behaviour for some time and have tracked markets for last 7 years. Here are the few mistakes which you should avoid while investing in the market;

• A lot of investors these days don’t really put in the hard work in micro managing their portfolio. Now, this is an important aspect. Your portfolio manager might be doing a fantastic job but at the end of the day, it’s your portfolio, you have to analyze it and make sure you bring in the desired changes by talking to your manager. 

• In the market but without any fundamental knowledge of markets and finance, and blindly following the recommendations of Analysts, Commentators and brokers.
  

• Not spending much time in understanding the data related to volumes of the index or even particular stocks. If an investor does some number crunching about indices or stocks, he’s more likely to get a good deal.

• Going for ‘Averaging’ when stocks go way below the purchase price. There’s a reason why a particular stock has fallen from the peak. You don’t have to catch a falling knife just to average your purchase price. You are already in losses and instead of going for good companies, you are again putting money in a company which has been a bad investment for you.

• Showing more inclination in buying a company which is of lower price (say a two/three digit) than a quality, proven business which is of higher price (say a four digit).

• Buying without any return expectations. The investor should be sure about his risk taking ability and his expectations of return from the investment.

• Trying to game the market. It’s almost impossible to game the market. You have to respect the volatility and other aspects of the market.