| MONEY |

4 MISTAKES PEOPLE MAKE IN

STOCK INVESTING
You can grow wealth sustainably from the stock market if you
circumvent these common missteps.
By Ian Tai

A
s a dividend investor who
derives dividend income
regularly from a portfolio
of dividend paying stocks, I
believe all of us can move towards
financial freedom investing in the
same. However, many fail to build
additional income or grow wealth
sustainably over the long-term
despite having a sincere desire to
move ahead financially.
So, where do we fall short?
In this article, I will list four
major mistakes that most people
make when attempting to make
money from the stock market.
MISTAKE #1: INVESTING
WITHOUT A PLAN
First, investing starts with one having
an investment plan.
Basically, it has four key elements:
a. Your Current Financial Status
b. Your Future Financial Goals
c. Duration
d. Choices of Investment Vehicles and
Strategies
An investment plan is likened
to one planning a trip. It starts with
where you are now, where you want
to be, when you intend to reach your
destination, and how you intend
to get there safely. The subject of
investing is confusing but usually
this is due to one trying to invest
without having a plan beforehand. It
is like driving around in circles when
investing their money.
This leads to:
MISTAKE #2: INVESTING
BECOMES A GAME OF
CHANCE
Today, we have 900+ stocks listed on
Bursa Malaysia. Which stocks should
you invest in?
Logically, the answer depends on
your investment plan as it helps you

38 | SmartInvestor | 10 . 2018
select stocks that would propel you This is a reality AN INVESTOR cash flows from their
towards financial success. However, of the stock market. WOULD FIRST customers. Thus, an
many do not bother to sit down Stock prices go up investor would first
and have their plans crafted as the and come down.
STUDY, IN study, in great length,
process seems boring. Thus, how It is the norm and GREAT LENGTH, a stock’s business
would most people pick their stocks? hence, a savvy A STOCK’S models, financials,
a. Feel, Guts, and Emotions? investor would and its future plans
b. Colleagues, Friends, or Relatives? have prepared for BUSINESS for growth. If the
c. Stock Tips, Rumours, and what to do if his or MODEL, stock is fundamentally
Commentaries? her investment fell solid, he proceeds
in price. But since
FINANCIALS, by assessing its stock
As such, many treat stocks like most people do not AND ITS FUTURE price and would only
lottery tickets. They may buy stocks have a plan, they PLANS FOR commit his capital
out of hope after having heard of panic when prices into it if its prices are
some “exciting news” about them. drop and “Sell GROWTH. relatively cheap. This
Many expect the prices of these Low” out of fear explains why savvy
stocks would go up forever. It is a even though they investors, like Warren
fallacy as they would soon met with “Bought High”. Buffett, can be confident on their
disappointment when their stocks fall At these times, an investor with stock purchases in a bad market.
in prices. This leads us to: know-how would enter the market Regrettably, many do not view
to accumulate more of these stocks shares as certificates of ownership of
MISTAKE #3: BUY HIGH, as their prices would be trading at a a business and thus, buy stocks with
SELL LOW discount (“Buy Low”). little knowledge on what businesses
Ideally, success in investing revolves This brings us to the next they are into and how much money
around four words: “Buy Low, Sell question: What gives these investors they are making. It is a mistake and
High”. the guts and the biggest downfall is one who
However, it is confidence to invest bought into stocks where their
easier said than in stocks when their businesses are unprofitable.
done. As mentioned, THE SUBJECT stock prices drop? Think about it. Are they able to
many buy stocks OF INVESTING grow shareholders’ wealth sustainably
after gaining over the long term?
knowledge of
IS CONFUSING MISTAKE #4: In short, it does not take a genius
exciting news about BUT USUALLY NOT TREATING or a crystal ball to build a stable and
them. What is this THIS IS DUE TO STOCKS AS a regular source of income from
news usually about? BUSINESSES stock investing. It takes a plan, logic,
In most cases, they ONE TRYING TO Investing is more willingness to learn and a business
are about stocks that INVEST WITHOUT intelligent when it is mindset to profit consistently from
have experienced business-like. the stock market.
the highest
HAVING A PLAN Warren Buffett,
appreciation in a BEFOREHAND. the living legend and
short span of time. an example of how
Instead of “Buying one who can amass Ian Tai is the founder
Low”, many resort to “Buying High” billions by investing, advised not to of Bursaking.com.
my, a platform which
as they want to join the bandwagon. speculate the markets.
empowers 4,700plus
Usually, a savvy investor would So, what is the meaning of being retail investors to build
stay away from such stocks or would “businesslike”? It is one who views sustainable wealth through savvy stock
have sold their shares at high prices stocks as businesses which own investing. Ian is reachable via email:
iantai888@gmail.com.
(“Sell High”). assets and generate profits and

SmartInvestor | 10 . 2018 | 39