5 common investing mistakes

STOCK markets around the world are in a state of confusion. There is no other way to describe it. How else can we explain, say, the behaviour of the Dow Jones Industrial Index? In March of this year, it dropped to a first-quarter low of about 33,000 points from a high of nearly 37,000 at the start of the year. This was followed by a 2,000-point rally, before plunging below 30,000 towards the end of the first quarter.

Just before the end of the third quarter, the US benchmark had climbed as much as 4,000 points to regain its mid-year high. It is now nestling at around 32,000. It is anyone’s guess whether it will be higher or lower by the end of 2022. There are some ‘experts’ who would like us to think that they know. They are either delusional, disingenuous, or just downright naive.

Warren Buffett once said: “There is nothing wrong with a ‘know-nothing’ investor who realises it. The problem is when you are a ‘know-nothing’ investor, but you think you know something.” In fact, a know-nothing investor can often outperform most professionals. But in order to do so, it is important to avoid some common investing mistakes. Here are 5 that we private investors can make. How many have we been guilty of?