Don’t imagine short-term fashion or hype is worth straying from your long term plan, EQUALLY don’t neglect the portfolio and have disciplined reviews based on quantitative analysis not fashion and emotion.
10 Being emotional
Everything we read tells us to buy low and sell high yet when it comes to it, we do the opposite. We tend to be more optimistic when the market goes up and more pessimistic when the market goes down. We typically give too much weight to feeling good from recent experience and recent positive trends and ignore the risks we are taking. We are happy pouring money into the markets during an upward trend. When the market turns and goes down, panic stops us investing, or even worse, we cash-in completely which potentially crystallises our losses.
As a long-term investor it makes sense to invest more in a downturn, even though it feels uncomfortable, especially as you keep wondering if this is the lowest point. It doesn’t matter because it is for the long-term and buying regularly as the market is going down means you can take advantage of each low point. 📈
11 Being swayed by social media noise
There is a lot of noise put out by media channels. Quotes like ‘past winners’ – who knows if they are going to be future winners, no one knows what changes will come about that will affect this company? “Today in the city” – by the time you read the article the share price has already reflected this news, so any opportunity that may have been available has been missed by time you see it. ‘Future tips’ – you should always do your own research, you don’t know what motivation lies behind a tip.
Be mindful of who has posted the content. If it’s an individual or company, check their credentials and make sure that you can trust the information being given. Also don’t be tempted to invest in something just because someone you know has. It could be a bad decision for them and isn’t suitable for what you’re trying to achieve. Stay focused on your plan and long-term investment goals. 🔍
12 Putting off portfolio reviews
Don’t neglect your annual portfolio reviews. It’s vital to review your plans and goals annually as your circumstances may have changed and you need to check that your investments are on target to achieve your goals. You should also review and rebalance your portfolio to make sure your risk is not too concentrated and that it continues to meet your changing risk appetite. This could mean you will be selling some of your more profitable shares and buying more of the stuff that hasn’t done so well yet, or a different investment. Equally you should review and get out of funds that are consistently underperforming and moving into something that is performing better. ☕
If you would also like to discuss any of these further, here is a link to my diary Discovery Call Meeting to book a free no obligation chat with me. I look forward to chatting with you.