Six types of gamblers on the stock market

THE lure of making a quick buck is all too common among individual investors. In my book, The Lottery Mindset: Investors, Gambling and the Stock Market, I began with the statement that "investors have a remarkable ability to lose money in myriad ways".

I then went on to show how different types of investors "donate" their hard-earned money to the stock market through various ill-conceived investment strategies. They are:

Despite the myriad of behavioral biases, investors are not doomed. Poor investment habits can be reversed by acquiring investment literacy and putting this into daily practice. Investors can acquire investment literacy by reading investment books that discuss principles of investing. They should also learn to be aware of emotions and cognitive biases that can lead them into a minefield of bad investment decisions. Once investors know the right approach to investing, they should put this into practice and not waver. As the saying goes: "Sow a habit, reap a destiny."