The Most Common Investing Mistake
What do you think is the most common investing mistake? In this post, I will go through the most common investing mistake in my experience as an investment coach.
For you to gain the most out of it, take 1 minute to think or guess
“What is the most common investing mistake to you?”
Don’t worry I will wait for you. Meanwhile, let me share a story.
Story
Every morning after my morning jog and playtime with my little girl, I will take the train to my office and begin my day as an investment analyst and coach. While I could do most of my work at home, I prefer my office space when I am working. (Laura is simply too cute and distracting)
So this morning, as usual I made my way to the train station at 9.30am. Usually, I will be accompanied by just a few people in the train station as it is past the morning rush hour. However, today I was in for a surprise!
What greeted me instead was this carnage below:
The station was packed to the brim and passengers were stopped from entering the station to prevent overcrowding.
When I got in, I noticed something interesting.
Passenger Behaviour
Everyone is queuing on the right side of the platform and waiting for the train to arrive. That side is the direction to the city. The arriving trains were all packed and few passengers could get in each time, leaving the passengers waiting in frustration.
While the left side of the platform is almost empty, the trains are coming and leaving with few people boarding. To be continued…
So “What is the most common investing mistake to you?”
From my experience, it is “Following The Crowd”
Most people do not know how to invest, so they decide to follow the crowd, believing that if most people are doing it, it must be the right thing.
This is a known behaviour. People tend to seek comfort in numbers when investing. They feel safe knowing that they are not alone in an investment and relish the fact that other people in it too.
But they did not realise that the others also DO NOT KNOW HOW TO INVEST too!
A fool can’t help but be a fool, but when others follow, he makes a fool of us all.
Anon.
It is Blind leading the Blind.
If you slow down and think about it, you would realise that following the crowd is a deadly mistake in investing.
Statistics have shown that most retail investors lose money in their investment. So if you know that most people are bad at investing, why do you follow the crowd?
If you want to follow anyone in investing, make sure they are profitable investors that produce good returns. Warren Buffett and Charlie Munger are definitely among the top investors to follow.
It is also my wish that this website become a good source of knowledge too. You read some of my past post on Investor’s Mindset
Back To The Story
This was when I turned away from the crowd and boarded the train in the direction AWAY from the city with some passengers staring at me, looking bewildered.
I alighted two stops later, and went across the platform to board the train going towards the city before it gets packed again. I got to my office 20mins later uneventfully.
