1) Lack of Diversification – This is one of the most common mistakes that stock investors do. They invest only in one or two companies. When the industry is hit by economic downturn, investor loses his investment. Remember this, “Never put all your eggs in one basket.”
2) Following Unsolicited Advice – Another reason why people lose money in stocks is because they follow hot tips and other unsolicited advice they hear from the radio, facebook, forums or from friend. You see opinion is like armpit. Everyone has it and most of it stinks. (Not original, I read it from one of the forums)….
Kung sa atin pa, kwentong barbero. Huwag maniwala sa kwentong barbero sa pag invest sa stocks.
3) Trading without a Plan – Nothing is more dangerous that going to the stock market and investing without a plan. So what do you need to plan? You need to have an idea of the following before you invest:
• What stocks to buy
• At what price to buy
• At what price to sell
Otherwise, if you just buy stocks and hope for the stocks to go up, you are treating it like a casino. And like in the case of any casino, the casino always wins.
It always come to the rescue.
4) No Idea on What Stock to Buy – Let us admit it. Going through the balance sheet and financial statement of every publicly traded companies in the Philippine stock market is not easy.
In fact, doing that is not even a guarantee that you pick a good company. Company stock news can sometimes be confusing and following all of them is not an easy thing to do.
5) Too much transaction – One of the disadvantages of many stock transactions (buying and selling stocks so many times) is that you pay transaction fee every time you sell and buy. The transaction fees can be minimal but they usually add up.This is one of the mistakes I was guilty of doing when I was starting.
So how do you avoid transaction fees? Invest long term, don’t trade.
So what can you do to start earning from the stock market?
• Diversify – come up with a good mix of stock portfolio from different industries
• Create an investment plan – always have a plan on what price to buy and what price to sell.
• Avoid trading and invest long term.
So that’s it. Avoid those things and you will not be one of those people who lose money in the Philippine stock market.
Got questions, clarification, suggestions or comments? Just add them below. I’ll do my best to answer you.