Mistakes You Should Avoid Before Starting to Invest

Investing in stock can be tempting because of its profit. Once you invest in the right stock and the value keeps rising, you will get unimaginable profit. From this, other people who have not started to invest yet are hoping for the same thing. But, it will be different. As a beginner, you need to be constantly aware of the market. Here are some mistakes that may face by a new investor.

Do not trust single information and do your research

Stock is a type of investment with high risk and high return. The scale of risk comparison for both losses and benefits is not much different. In addition, the tendency to fall and increase the value of shares can no longer change in a matter of days or even in a matter of hours. However, the lure of profits that can be given in playing stocks sometimes makes people who are less careful and ultimately fail in investing in stocks. For those of you who want to start investing in stocks, it’s a good idea to learn from the mistakes of previous investors. Here are eleven big stock investor mistakes you need to avoid.

  • Don’t Understand Fundamentals

The company’s fundamentals should be the fundamental analysis in deciding to buy a stock. Unfortunately, many investors prefer to see a momentary trend in technical analysis. The desire to make quick profits in the capital market makes stock investors tend to ignore the company’s fundamentals. The company’s profit and loss that triggers stock prices are very dependent on the company’s fundamentals. You can imagine the risks that threaten investors if the fundamentals are ignored.

  • Easily Desperate

Owning stock means owning a small percentage of a business. Stock investment can also be analogous to doing business. You also have to be prepared for the risks that exist, namely uncertainty. That is, you must be prepared not only when you make a profit but also be prepared for the risk of loss. Successful entrepreneurs must have experienced ups and downs in running their business, as well as stock investors. As a beginner stock investor, when you make a mistake in investing, don’t give up easily and leave the market. Learn from these failures and improve the way you invest so that you can become a steel-minded smart investor.

  • Stuck in Risky Short-Term Transactions

Short-term transactions (short selling) are indeed tempting. You can imagine if you have significant capital in just a few minutes, you can reap millions of rupiah in profits with a system like this. But in truth, transactions like this are very time-consuming, energy, and emotional. Beyond that, the risks that threaten are also relatively large. Prices that fluctuate rapidly require the ability of experienced stock investors and can control emotions to make transactions at the right time. Reaching profit in a short time with this kind of transaction model will be very risky. Indeed, for maximum results, the stock market almost always produces positive returns in the long term, namely in the range of three years or more.

Mistakes You Should Avoid Before Starting to Invest

Diversifying your stocks

Choosing stock can also be hard. You need to forecast what will happen in the next one to five years. However, your expectation is not always true. That is why you need stock diversification. Here is the list of mistakes that may happen in choosing stock:

  • Stuck in cheap stocks, even though they have no potential

It is a law of business; an investor wants to get a low price and sell when it is high. The world of stocks is no exception. Unfortunately, many novice investors misunderstand this investment strategy by taking stock at a low price, but in fact, the stock comes from a bad company. The thing that encourages novice investors to buy shares at low prices is because of limited capital. Many novice investors buy lots of small value stocks in the hope of making a lot of profit, even though this kind of investment tends to be detrimental.

  • Afraid to buy stocks when the market is down

Economic conditions move cyclically, sometimes up and sometimes down. When the economy is good, the stock market is excited and raises stock prices up (bullish). Investors also prefer to buy stocks when the market is bullish. Conversely, when the economy worsens, the stock market will be sluggish, and investors will be pessimistic. This will also affect the stock price, so its value will fall (bearish). A bear market offers an investment opportunity to buy good stocks at low prices if we look closely.

  • Only Sticking to One Stock

Only fixating on one stock is very dangerous because it makes stock investors irrational in valuing their shares. When an investor has fallen in love with a stock, he tends to ignore the bad things about his favorite stock, only wanting to hear the good things (confirmation bias). Use stocks as a medium or tool that can lead you to your financial goals, but don’t get too hung up on them because, in the end, you will still release the shares to meet your financial goals.

Purchasing various stocks is a good choice to avoid a huge loss. For instance, you can buy various stocks in the health sector. LGVW stock or Longview Acquisition Corp has merged with Butterfly Network Inc., a company that operates in the medical imaging industry. In this time of the pandemic, healthcare has a good move, including LGVW stock. To clarify this, take a look at the next section.

Is LGVW good stock to buy?

Longview Acquisition Corp is included in special purpose acquisition companies, or SPACs merged with Butterfly Network Inc. LGVW stock has an awesome performance for a long-term investment or a year. It will make it a good performance because Butterfly Network focuses on medical devices, including ultrasound equipment. The needs of these devices will always be profitable, especially in this time of the pandemic. That is why if you want to invest $100 this year, your money will reach up to $496.98 in the next five years or 2026. It’s impressive, right?

 

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