How to avoid investment traps
Unskilled investors continue to make mistakes but there are ways to prevent serious losses, writes Michel Pireu
In his book How to Make Money in Stocks, William O’Neil dedicates an entire chapter to the common blunders and misapprehensions of novice investors. These can be boiled down to a list of about 18. Those of us who’ve been in the market a while will be familiar with them and might even have experienced a few first-hand. And yet we go on making them. So, here’s a quick reminder: Novice traders invariably want to make a quick killing in the market. They want too much, too fast, without doing the necessary hard work or acquiring essential skills — mistaken in the belief that speculating is an easy way to make a quick buck. "Ninety percent of people in the market, professionals and amateurs alike, haven’t done enough homework," says O’Neil. Most investors never get past the starting gate because they don’t know what to look for to find a successful stock. They buy "nothing-to-write-home-about" stocks that are not acting particularly well. A good way to ensure miserable results is to buy o...
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