Avoid These 8 Stupid Investor Tricks from 10 Rules for Financial Success by Burton G. Malkiel
It’s important to avoid these 8 Stupid Investor Tricks from 10 Rules for Financial Success by Burton G. Malkiel.
Let’s go over them one by one, and please check out a summary of the whole book by clicking here – 10 Rules for Financial Success by Burton G. Malkiel.
#1 Overconfidence
Studies have been performed that show people tend to be pretty confident that their abilities are better than others.
This explains why people think they can beat the market, and that day trading will make them rich. It also explains why we have money managers running investment funds.
The best way to handle overconfidence is to recognize it.
#2 Herding
We want to be a part of something and don’t want to miss out.
Thus we tend to follow the crowd.
If everyone is investing in Bitcoin, tulips, tech stocks or whatever is the next greatest investment, we feel like we should too…even if we know nothing about it, have no guarantees of a return or even getting our money back at all.
#3 Illusion of Control
Studies show that people tend to think they have control over things that they really have no control over.
In investing, people will hold onto losing stocks that they’ve chosen, longer than is wise.
They will feel that they have the ability to make money in the market by being in control, choosing stocks, etc.
Malkiel reminds us that no one person controls the market.
#4 Loss Aversion
People tend to fear losses more than they are overjoyed by gains.
Investors thus tend to take more risks to avoid losses, than to achieve gains.
They will keep their losers (because if they sold them then they would have to admit that they made a mistake), and they will sell their winners because that lets them enjoy the success of being correct.
#5 Susceptibility to Hot Tip Investing
There are no hot tips for the average investor, don’t listen or follow them.
#6 Gin Rummy Behavior
Buy and hold. Constantly switching from fund to fund will only rack up fees and transfer costs. Just leave your investment alone!
#7 Believing in Foolproof Schemes
Nothing is fool proof. Beat most investors by mimicking the market
#8 Ignoring Costs
People tend to overlook fees, and yet they are extremely important when it comes to growing your investment returns.
Conclusion
Are you guilty of any or all of these 8 Stupid Investor Tricks from 10 Rules for Financial Success by Burton G. Malkiel.
I sure am!
And all of them lost me money. Leave a comment below on what you’ve learned to become a better investor and overcome your stupid investor mistakes!
About Mey Duldulao
Back in 2011 I had over $30,000 in credit card and line of credit debt, was living paycheck to paycheck and was stressed out over my lack of success in my financial life.
In April of 2016, I became debt free and had a monthly passive income stream.
I quit my job on December 23, 2016, and started doing my dream work of mentoring others on what I did to create the freedom to quit my job.
In 2017 we bought our first condo in Waikiki, and we went on 5 weeks of vacation (including a 7 day cruise to the Mexican Riviera)!!!
In 2018 we bought our first investment property and we converted our first condo into our 2nd investment property.
In 2019 we sold an investment property to buy our dream home steps away from Waikiki beach.
I spend most of my time doing what I dreamed of for years, spending my days with my son Jordan and my husband Jomel, enjoying motherhood and being a wife.
I also enjoy researching Financial Freedom and sharing what I learn with my clients and on my blog.
If you want to learn more about how I can help take back control of your money and your time, then CLICK HERE, watch the free video and get started!