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In This Issue:
- Introduction
- Common Investing Mistakes...
- Events Coming Soon
Introduction
Welcome to this months issue of “Tales for Success”. This month I am sharing with you Common Investing Mistakes.
Remember we actively encourage you to pass this onto friends and family who you feel may enjoy this information. A forwarding link may be found at the bottom of this publication.
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Common Investing Mistakes...
Mistake #1: Not having an exit plan before buying
An exit plan is one thing that experienced investors/traders always have before initiating a position. The reason is simple: you must have a plan and stick to it, or else every decision you make will be emotional, not rational. Worse yet, the larger the position is, the less rational your decision-making will be. Therefore it is vital to make all decisions up front, before you are scared. Emotional decisions almost always are poor ones, leading to large losses and small gains.
Mistake #2: Plunging too much into a stock all at once
Another common error committed by many investors is plunging. This means that the investor makes two mistakes: First, they purchase entirely too large a position in a single stock. Secondly, they do it all at once. The real problem with doing this is that the investor puts themselves in a perfect position for their emotional decision-making to run wild. Typically what happens is the following: First, the plunger takes a huge position. Then, his stock either begins declining or increasing. In either outcome, the emotions of plunging work against the poor investor. For if the stock declines, the investor will either get scared and sell out with a loss, or hold on in hopes of an increase in value (which may never happen). If the stock increases in value, the investor will often have a large dollar gain that is hard to resist cashing in. In this latter case, the investor makes the mistake of cutting his winnings short. In short, plunging leads to cutting your potential gains short and letting your losses keep mounting...exactly the opposite of what you should be trying to accomplish.
Mistake #3: Failing to cut losses
A certain percentage of stocks you choose will show themselves to be losers. These losers must be dealt with in order to limit their impact on your overall performance. Once a stock starts to decline it can become a vicious cycle, leading to even more declines. As unbelievable as it seems to the novice investor, the more and longer a stock declines the more it is apt to continue declining, or continue going sideways. For this reason, it is important to stop the bleeding once it becomes apparent that you have chosen a loser.
The actions of most investors are opposite the logical course of action. Most hold on to their losers, hoping that the stock will someday pull itself together. Some also hold on because they can't face up to the fact that they made a mistake. They reason that as long as they don't sell, then they haven't really lost anything. This is an error because the value of their stock is the current market price, not what they paid for it.
Mistake #4: Choosing stocks that are in a downtrend
Buying stocks which are in a downward price spiral is the most common mistake among novice investors. In order to profit from such a strategy, you need to be right about two things at once: First, that the stock's slide will end (a surprising number never do until they become worthless), and secondly, the timing of when (and at what price) the stock's slide will end. Your chances of being right about both things are slim.
Mistake #5: Adding to a losing position
Another strategic error commonly practiced by many amateur investors is adding more money to a losing position. The reasoning in the mind of the investor who does this goes something like this: "I bought the stock when it was $20. Now it is $10, so it's twice as good a deal as it was at $20. Besides, my average cost per share will come way down once I add to the position." This strategy is fool-hardy
Mistake #6: Falling in love with a stock
It's a common mistake to have a good run with a stock and then decide that you will never sell it. Some folks have a hard time parting with something that has done so well for them, but again, what your emotions tell you to do and what you should do are two different things. Save the ‘till death do us part' thing for your marriage, not for your stocks. Even Warren Buffett takes profits occasionally.
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Events Coming Soon
Evening Training with Jules Dawson
"An Introduction to Shares and Options"
Wed 10th May & Sat 13th May at
Opal Cove Resort, Coffs Harbour, NSW 2480
Just $44 gets you $270 worth of FREE BONUSES...
(Offer available to first 50 attendees only).
Click For More Information
Two Day Training with Jules Dawson
"Trading Wisely"
Sat 3rd & Sun 4th June - 9am - 8pm each day
at Opal Cove Resort, Coffs Harbour, NSW 2480
Attend this life changing event…and get your $2,327 worth of FREE BONUSES!
Special Early Bird Rate = $1,987... That’s a huge saving of $713 just for making a quick decision!
This event is SELLING OUT FAST!
Click For More Information
Visa, BankCard and MasterCard accepted.
MetaStock Installation & Training:
Half-Day Training
Sat 22nd April at
Sebel Aqualuna Resort, Coffs Harbour NSW 2480
The program hours are from 1pm to 6pm
Click For More Information
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Next Issue of “Tales for Success”
The next full edition of this free newsletter will come to your Inbox in approximately one month’s time. It will be packed with solid information to help you improve your life in ways that are always wealthy and wise. ’Til then…
Warmly,
Jules Dawson
Jule Corporation Pty Ltd
PO Box 1241 Mullumbimby NSW 2482
Telephone: 1300 557 881
Email: info@julecorp.com
Web: www.julecorp.com
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