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10 Investment Mistakes to Avoid
By Donald W. Angel, CFP®, AIF®

Donald W. AngelWho needs a pyramid scheme or a crooked money manager when you can lose money all by yourself? Here are 10 ways to run your stock portfolio right into the ground.

  1. Go with the herd. Investors tend to follow the leaders and are overly optimistic when the market goes up and overly pessimistic when it declines.
  2. Put all of your bets on high-flyers. If you had invested everything in Apple 10 years ago, you'd be a millionaire. But what if you had invested in Enron, Conseco, CIT, WorldCom, Washington Mutual or Lehman Brothers, which all have gone bankrupt?
  3. Buy when the market’s up. If the market is on a tear, how can you lose? Just ask the hordes who flocked to stocks in 1999 and 2000 – and then lost their shirts in the ensuing bear market.
  4. Sell when the market is down. It's what many inexperienced investors do, locking in losses and precluding future recoveries.
  5. Stay on the sidelines until markets calm down. In today's world, that means settling for a miniscule return that may not keep pace with inflation.
  6. Buy on tips from friends. Who needs professional advice when your new buddy from the gym gives you some great tips?
  7. Rely on pundits. Whose advice should you follow anyway? Remember that what pundits sell best is themselves.
  8. Go with your gut. Fundamental research may be OK for pros, but it's much easier to buy or sell based on your gut. When it comes to hunches, irrationality rules.
  9. React to volatility. Responding to market ups and downs is a surefire way to lock in losses. Even professionals have a poor record of guessing major shifts.
  10. Set it and forget it. Ignoring your portfolio until ready to cash in is a perfect opportunity to go completely out of balance and shift life-stage priorities.

The opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Donald Angel, of Cottrill, Arbutina Wealth Management Group of Peters Township, is a registered representative with, and securities, financial planning and fee-based services are offered through, LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. For more, visit www.cottrillarbutina.com/wm. Prepared in cooperation with S&P Capital IQ Financial Communications.

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