5 Stock Market Mistakes To Avoid before investing
1. No Knowledge of the Business Model
You might not study the company's business model thoroughly before investing in its stock, and it is risky. Moreover, it leads to insufficient planning, which is risky. Even renowned businessmen advise people to avoid such mistakes in stock market.
Solution
Analyse how the company performed in the last half decade and whether it can survive one more decade. Calculate the dividend on equity, earnings per share, and more. Also, compare the stocks of more than one company and check whether the company is in debt, has stable operations, or has less-hyped shares.
2. Prioritising Emotions
You might decide to buy stock after listening to your friends or family members and end up making irrelevant decisions based on emotions. It is, obviously, a mistake in stock market. Similarly, other emotions that can influence your decisions are fear and greed.
Solution
Study the company thoroughly or hire a financial advisor for better decisions for your business, but do not let anyone randomly make financial decisions for your stock market investment. So, focus on the bigger picture.
3. Holding Wrong Stocks
Like various traders, you might continue to hold a failing stock with the hope of increasing its value in the future. However, it might not go up, and you might suffer unnecessary losses. In this case, you might be timing the stock market based on your predictions, and it might turn out to be the wrong investment strategy.
Solution
Set a stop-loss, which means setting a lower limit for your stock and selling it at a predetermined cost if it performs worse than the limit. Moreover, cor
4. Following The Rumors In The Stock
There is a difference between genuine news and rumors, especially in the stock market. You might immediately react to the rumors as a newbie, while the expert traders might be waiting for the genuine news. Moreover, it might be risky to always believe the '24-hour' news in the world of the stock market. Solely depending on the news is risky because it has already spread in the market and is affecting market pricing.
Solution
Conduct proper stock market research under proper guidance, and do not quickly fall prey to any sensitive news. You may listen to the news, but make decisions only according to your research and efforts.
5. Believing In The Wrong Advisor
A better financial advisor should be able to solve your financial problems in the stock market and in your regular life. The advisor must consider all your financial aspects and provide appropriate results. However, having the wrong one will increase your problems in the stock market.