3 Pitfalls to Avoid in the Stock Market

The COVID-19 pandemic has attracted a wave of new investors who may think investing is simple and the stock market is platform to get rich quickly. Some may have probably realised that the market is probably a bigger and way more complex animal than it appears to be as most portfolio get decimated under a rising interest rate environment in 2022. 

With 2023 likely to another challenging year as recessionary fears starting to haunt investors, it is critical to know the common pitfalls and be prepared to avoid them. 

1. Failing to diversify the portfolio

It is human nature to have favourite or preferred companies. Posts containing headers such as "How much you have earned if you invested $xxx in xxx stock" are plastered over social media, and also how many people amassed large amounts of wealth and became "Teslanaires" by focusing on $Tesla Motors(TSLA)$ This may have prompted some retail investors to pick only a handful of stocks. The portfolio value would have vaporised by at least 30-40% easily if one has picked speculative, meme or overvalued stocks such as $GameStop(GME)$ ,$Palantir Technologies Inc.(PLTR)$  $Enphase Energy(ENPH)$ .

Hence, it is imperative to diversify your investments to spread risk and reduce the impact of any one company performing poorly. This can be in the form of buying at least 15-20 compseis in various industries. Do note that buying an bunch of tech giants does not equate to Portfolio diversification! For those who do not have the time to do research on individual companies, ETFs such as $SPDR S&P 500 ETF Trust(SPY)$ and $Invesco QQQ Trust(QQQ)$  that mirror the index can be good choices for long term investments. 

2. Being too emotional and not sticking to your game plan. 

One can be easily swayed by the market volatility and get caught up in the excitement or fear of the market. Most retail investors would either FOMO and buy in at higher than intended prices at an enormous rally or panic sell at a loss in a stock market plunge. 

Emotions can derail your game plan as losses get materialised or market reversals after a FOMO diminishes your purchasing ability. It is crucial to stay calm and stick to your plan instead of making impulsive decisions influenced by market emotions. 

3. Being impatient

The stock market can be volatile as it does not move in a straight line. Unless you are trading, it is important to be patient with your investments as long as the companies continue to have strong fundamentals or exhibited good growth potential, such as Microsoft, Amazon etc. 

What this means is not to make impulsive decisions based on short-term fluctuations. One should focus on longer term trends and wait for the right opportunities to buy. 

As we usher in the year of rabbit, I wish all myTiger friends a year abundant of happiness, good wealth and prosperity! May all our portfolios hop to new highs and @Tiger_SG continue to achieve greater heights! 


@TigerStars @CaptainTiger @Tiger_chat @MillionaireTiger @TigerEvents  

# Three Warnings to Remind in Stock Market

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • HelenJanet
    ·01-24
    TOP
    Thanks for sharing 👍👍
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  • Kaixiang
    ·01-24
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    @DiAngel @MHh @pete13 @HelenJanet @SPOT_ON @Bonta @Boo2020 @koolgal @Big Cat @Bellabing @EKT @SR050321 @VivianChua @Wayneqq @wywy @Jaydenkho @Furore @AliceSam @TinyTiger @LMSunshine @Fenger1188 @melson @BenjiFuji @pekss @rL @JC888 @Mungerism @daz888888888 @CYKuan @Jo Tan @SirBahamut @Success88 @Universe宇宙 @RDPD富爸穷爸
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    • EKT
      👍
      01-27
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    • Universe宇宙
      [ShakeHands] [Like]
      01-25
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    • SPOT_ON
      [Bless] [Bless] [Bless]
      01-24
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  • LMSunshine
    ·01-24
    TOP
    Agree❣️ No issue with uploading photos now?
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  • AndreaClarissa
    ·01-24
    TOP
    It would be useful if we learn some knowledge about investment psychology.
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  • All in Tesla
    ·01-25
    TOP
    Investing is all about long term horizon. It is not possible to time the market best strategy by far is still DCA. 😉
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  • PenelopeHood
    ·01-24
    TOP
    Hard to try to not to be impatient as there are our own money in it.
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    • blue sky
      对对对 [笑哭]
      01-26
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  • psk
    ·01-26
    TOP
    thanks for the advise and reminder to diversify and remain patient.
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    • CHUMOI
      Ok
      01-26
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  • koolgal
    ·01-26
    Awesome insights.  Thanks for sharing 🌈🌈🌈
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  • Good sharing 👍
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  • jimstocker
    ·01-26
    Nice to know about it. thanks
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  • xiaobaii
    ·01-25
    like & comment pls
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  • boonk
    ·01-25
    Yes, stick to plan iskey
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  • MaudNelly
    ·01-24
    Diversifing the portfolio is really important.
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  • Helen1229
    ·01-25
    👍🏻👍🏻👍🏻👍🏻👍🏻👍🏻
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  • Bons
    ·01-25
    noted, thanks for the reminder
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  • blue sky
    ·01-26
    耐心,耐心。 [财迷]
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  • wonder how many dfferent stock do I need for my portfolio
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  • jethro
    ·01-26
    thanks for sharing
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  • MDK
    ·01-26
    Thank you for sharing
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  • jethro
    ·01-26
    Thanks for sharing
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