The stock market can be a risky place to invest your capital.
Give or Accept Tips
Giving or accepting tips is a certain way to lose money in the stock market. It means that you lack the strength of conviction in your investment decisions. This is a recipe for disaster. Instead, do your homework, make your decision and keep quiet about it.
Sell when everyone is Fearful
By selling when everyone is fearful and the news is bad and getting worse you are guaranteed to sell low and to lose money. Instead look past the current doom and gloom to sunnier days ahead.
Buy only during Booms
Buying when the news is good and the economy is booming will result in you being guaranteed to buy high. Instead ask yourself if perhaps it might be a better time to sell. Is all of the optimism in the market justified? Are expectations that are built into stock prices overly optimistic?
Join the Crowd
Some people will buy a stock just because everyone else is doing it. Doing this may mean that you are among the last ones on board as it gets ready for a terrifying dive off of the cliff. Instead, think independently. Is this stock really worth what you are going to pay for it? Do your homework and think independently.
Go against the Trend
If a stock is trending down, you can lose a lot of your capital by betting that this trend will reverse itself. Instead, look for a stock that is trending upwards in price with a steady history of rising revenues, profits and dividends.
