There’s something about capital markets that captivates everyone: Some think stocks are an easy way to make a quick score. Others, on other hand, liken stock to gambling.

And then there are some who just don’t have a clue about stocks at all.

(Fret not, #WealthGANG, we’re here to serve!)

But why is the stock market so fascinating? What causes people to be completely overawed by it?

Despite the many myths, it is extremely easy to trade in the markets; you can actually get started on your smartphone for less than $10.

But to trade stocks successfully? Now that’s another story—despite what those in-their-20s Instagram crypto money managers and scammers want to tell you.

For all the myths, biases, (mis)beliefs and misconceptions, you can still hedge your bets by following a disciplined blueprint. In this case here, we will share with you what not to do.

Here are X common investor mistakes to avoid at all times.

Mistake #1: Thinking you can make a quick buck from Wall Street

This is probably the single biggest misconception about the stock market. Investor legends like Warren Buffett always maintain you need to invest over a long-term horizon to book big profits.

And even if you have stories like the ‘Teenage Bitcoin Millionaire,’ trust us on this one! They’re the exception, not the rule.

Mistake #2: Investing on impulse

Many investors jump into trading based on hype—kinda like Bitcoin, which surged to record highs in December before losing billions of dollars since, sometimes in 24-hour periods.

In other words, decision to enter the stock market’s based on an impulse. There’s no proper entry strategy and no exit strategy.

This is not how an investment decision should be made. Every investor should realize that investing in the stock market is a long-term play—it’s definitely NOT a get-rich-quick scheme.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

-Paul Samuelson

Mistake #3: Following the hot tip! 

Investors are all on the lookout for hot leads and stock market tips. But in reality, there aren’t any. This mistake is exactly how the “Wolf of Wall Street”got people onboard with his schemes.

Even if someone does have a hot tip, you have to watch out for human nature: People may skew positively towards stocks they own—and negatively towards the ones they don’t.

The reality is this: There are qualified analysts who spend all day researching market trends and metrics.

Investment managers and brokers then share these analyses with premium clients. Much more credible info, yes. However even after receiving this analysis, there is no guarantee the investor will see an ROI.

Warren Buffett is a firm believer that investors can grow wealth by just replicating the indices instead of looking for multi-baggers and stocks that are expected to crush the market.

“If stock market experts were so expert, they would be buying stock, not selling advice.”
Norman Ralph Augustine

Mistake #4: “Buy/Sell Strategy”

This is probably the biggest misconception of all. Many investors, impulsively, end up buying a stock just because they see the price surging. (Again, think Bitcoin in December.)

As the price continue to climb, they’ll sell the stock and make a huge profit. The so-called Buy-Hold-Sell Strategy

But that is not how the stock market works. (Buffett’s mantra is buy-hold-and don’t watch too closely.)

If you do buy a stock, hold it for some time and then sell…you don’t have any guarantees the stock will rise.

A better play—aside from Buffett’s, obviously—is the borderline cliched “Buy Low/Sell High” strategy. In this strategy, an investor buys a stock on the downslide instead of when the price is rising.

All the investor has to do is hold the stock until a price correction occurs. If the stock is fundamentally strong, the price will increase. This will be the time to sell it off and earn a profit.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett 

Mistake #5: No clear investment objective

Every investor should define, clearly, what his or her investment goals are.

The rule of thumb of investing is the higher the risk, the higher the return. So if the market return is less, then—needless to say—the risk involved is deemed less.

There are two forms of securities, generally: Stocks (equity) and bonds (debt).

Stocks

Equity stocks tend to have higher risks associated with them. However, there is a tremendous potential to earn capital gains from equity shares—but with the caveat that you should be prepared to lose your investment

Bonds

Bonds and fixed income instruments are relatively less risky than equity shares. They offer periodic returns in the form of interest but are still prone to market risk.

A short-term investor looking for minimal risk is better off buying treasury bills and government securities.

Whether it’s cashing out on tech stocks with high upside or just collecting tax-free yield from municipal bonds, your investments should be in line with your objective.

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch