The professional investor, we are always stunned at the “expert” recommendations bandied about the internet. The majority of these “expert” recommendation are naive and stupid, so rather than build a more academic list (which I have done before) I am going to take this chance to move violently back against these dangerous and foolish “recommendations”!
Investing in IPOs.
Let’s be most clear about what a preliminary public contribution is not. It is not“the ground floor” of a company. The ground floor was the investment by the business venture Capital firms. We are not getting in on the “ground floor” with an IPO, you are financing Free Currency Trading Tips the way out of the guys who got in on the ground floor.
IPOs are designed to take money from the community, not to provide it to them. In fact, if an IPO takes off after launch that means the investment bank did not do their job right. IPOs, in an ideal world for the owners of the company, should launch and stay about the same until their lockups are over. That wealth that the underwriter priced the launch correctly and the owner maximized their profit by getting the maximum price for their business.
Investing in Penny Stocks.
Without quantity and liquidity, your buying and selling decisions cannot be made the same way. You cannot purely buy and sell the stock, you have to construct a position gradually (like $2,000 at a time) and you have to exit a position slowly (like $1,000 at a time). I dangerously doubt you can make the “fast cash” these banner ads advertise.
Gold, on the entire, was an awful investment over the last 20 years. In fact, the current price of gold has been increasing, comparative to inflation.Let’s we see this a step additional because the majority people don’t own gold outright, their own gold bullion/coins. These coins are minted from gold, which means that they have additional minting fees, usually 6%-9% over the actual price of gold. Add a deal free on the stock market, which is another 2%, and you are looking at a straightforward 05%-10% in the buy/sell business cost. That means that gold has to climb 05% to 10% just for you to crack even.
Diversifying and Rebalancing.
Studies show frequently that most investors are weakly diversified and don’t rebalance on a regular basis in truth, rebalancing and proper diversification are critically important, and can be the difference between attaining your goals and not.
Here’s the deal: if you own 05 different stock market, you are not correctly diversified. I know that each one represents a dissimilar sector or country or style, but they will all behave the same in a downturn.
Not Knowing when Losses are Too Much.
Investors instinctively feel that losses are bad.a seminal paper on the awareness of the losses. Our research discovered that people feel about 3.15 times more pain with losses than enjoyment to gain.
But intuition and feeling are not profitable investment strategies.Yet we know, mathematically, that losses are bad. in spite of everything, the mathematics of loss are well known: to recover from a 10% loss, you need a 30% gain to break even.