5 ways to find out the mistakes of beginner stock investors that must be avoided
5 ways to find out the mistakes of beginner stock investors that must be avoided
Capital Market Observers describe some mistakes that are often made by novice stock investors so that you can avoid them. At least, there are 5 mistakes that are often made by newbie investors.
1. Buy because of the bandwagon
The first mistake that is often encountered among novice investors is buying a stock because they are too involved. This will affect the psychology of investors.
As a result, investors do not have high confidence to wait for the increase in these shares and do not dare to put in large amounts when they are profitable, the results received will not be maximal. On the other hand, when investors go down, they will tend to panic and cut losses.
2. Panic Buying and Panic Selling
According to Rivan, panic buying occurs when novice investors experience FOMO (fear of missing out) or do not want to miss the train so that someone will tend to buy shares in large quantities.
Next, when the price of shares purchased due to FOMO drops, Rivan continued, panic selling will occur. He emphasized that panic selling occurs because investors do not recognize the company being bought
3. Not Diversifying
Rivan suggested for novice investors to diversify by dividing assets into several stock options in different sectors. By diversifying means that investors can minimize losses.
However, another mistake that investors make when diversifying is buying too many shares. According to Rivan, the risk that arises is that the portfolio will be difficult to grow.
4. Don't Know The Fair Price Of The Stock
When conducting the analysis, Rivan suggested, there are two things that can be observed by investors, namely the company's performance and the valuation of its shares.
There are several methods to determine the fair price of shares, including Discounted Cash Flow, Eps Discounted Model, Equity Growth and Dividend Discounted Model.
5. Using "Hot Money"
In this case, hot money is money for daily needs or funds for certain purposes, such as funds for marriage or children's needs.
Rivan stressed that investors need to think about the risks that arise. For example, when the money is needed and forced to be sold when the stock price is down, the investor will lose.
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