Investing Mistakes - Why Beginners Lose Money in the Stock Market

let's go over some investing mistakes to avoid if you are a beginner in the stock market or you're new to stocks let me save you some trouble let me save you some heartache and let me save you some money let's begin investing mistakes number one if a company announces that they're going bankrupt you should run away from that stuff you do not want to be buying into a company that has just announced or has announced that they're going bankrupt the writing is on the wall here's what happens if a company says that they're going bankrupt

the stock it's gonna continue to trade there they're not required to delist or anything so if you're buying that stock that's gonna go bankrupt thinking that's gonna make a recovery you're being foolish more often than not the stock gets wiped out the shareholders get wiped out but the stock value goes to zero you're just if you're trying to a quick flip like buy low and sell a little bit higher you're you're just gambling therefore if a stock if a company announces they're going bankrupt just don't mess around with it I mean you're just you're just

being foolish or you're just gambling please avoid that mistake investing mistakes number two don't buy penny stocks from the over-the-counter market the OTC just stick to your stocks on reputable exchanges you know if you again this is for beginners if you are a beginner just stick to the name-brand exchanges buy stocks in the New York Stock Exchange the NYC buy stocks on the Nasdaq don't go to the over-the-counter markets don't buy Pink Sheets stocks you know there's a reason why those companies those stocks are over there it's usually because they fail to meet the requirements

to be listed on a reputable exchange or that they got delisted you know dude that doesn't sound too promising of a company in most instances therefore especially if you're big please avoid the over-the-counter markets like that's very dangerous stick to stick to the reputable exchanges stick to the stocks on reputable exchanges investing miss investing mistakes number three don't participate in the message boards the online message boards you do not want to open up that box you're just gonna be talking with internet trolls what I mean is that you're just gonna be talking with weirdos they're

not gonna be adding value they're not going to be you're not gonna be having productive conversations you're not going to be doing due diligence talking with these internet trolls from these who who knows the person behind the other side of that screen it's you just don't go down that bunny hole please investing mistakes number four if you are a beginner do not try to be a day trader you know again you are new to the stock market if you're trying to go buy sell buy sell intraday just constantly you're gonna end up losing money it's

you might have a good day or two but it's just gonna be luck you know you keep you can find out the hard way go ahead be my guest and then you're gonna come back and then you're gonna think oh yeah Brian was right if anything you should well I would reckon if you're if you're new to the market I would recommend just buying and holding for the long run that will probably be the best strategy until you've gained some experience and understand how stocks work how the market moves and all that if you want

to be doing the buying and selling I'll okay if that's gonna be the case you should do swing trading which is at least holding for a few days or a few weeks or a few months like a longer hold period if you're gonna be trying to is buy sell buy sell intraday in the same day as a matter of minutes or hours you're going to be losing to the professionals that do this with much more sophisticated software with much more sophisticated teams information speed everything you're just you're picking a losing battle it's just my recommendation

investing tips or investing mistakes number five don't try to time the markets we don't have crystal balls even the best stock pickers don't have crystal balls meaning that we don't know the future the stock can go up down Co sideways and go who knows the best approach especially if you're a beginner is you know if you want to get into the market get into the market with a staggered approach you know just little by little like you can set some money aside each month to deploy into the stock market like a systematic approach like every

month I will put in X amount of dollars that way you're averaging in at least you won't be buying at the very top and you know unfortunately you won't be buying at the very bottom it's gonna be a mixed approach so that's gonna give you an averaging that will ensure that you're not overpaying you yeah you won't be getting the best deal because you need time it perfectly but you won't be overpaying so just getting in with a staggered approach don't try to time the market because if you try to time the market you know

what happened back ten years ago if you were on the sidelines just saying I think the markets gonna fall I'm gonna wait for a huge dip I'm gonna way for the next recession you would have been on the sidelines and you would not have participated in all the games for ten years and then you would have lost out there for just get in you know little by little each month for each few months investing mistakes number six pay attention to the general markets okay what this means is that this is all relative you need to

pay attention to the general market the overall mark the macro-environment to during the good time okay this is very important during the good times when the stock market's going up everybody's gonna look like a stock market whiz everybody's gonna look like a stock market guru like they're gonna look like a genius so I mean if you are up like 20 percents you know with your stock picks but the general market is up 30 percent then you're actually not that great of a stock picker because the overall market is performing better than you are and during

bad times you know don't kick yourself and don't get upset with yourself if your stocks are going down because you need to compare how much do your stocks are your portfolio or your picks go down in comparison to the cheer up general markets and I've said this before if your stock picks or your portfolio is down 5% but the overall market is down 20% then you did great you know you lost 5% when the overall market lost 20% you outperformed the market so you need to take into consideration the overall market the general markets investing

mistakes number 7 if a stock is paying a too-good-to-be-true dividends that's a red flag you know I've covered this in the dividends stock video that I have out there there's gonna be stocks that have dividend yields of like 20 percent of 25 percent that should be a red flag you know I would really be cautious heading into a stock like that I would do extra analysis because in that type of situation you're gonna be thinking that's awesome like I'm gonna earn 1% if I have my money you know in a savings account but I can

earn 20% in dividends if I put my money in that stock but here's the thing usually in that situation it's too good to be true at dividend yield of about 20% or higher and what they're gonna do usually is slash the dividends dramatically or they could just pull the dividend just wipe it out completely and if that's the case not only is the dividend gone the share price will probably plummet like crazy and you'll lose your capital therefore if you see a dividend paying stock with the yield that just looks insane be very cautious it

could be a trap investing mistakes number eight don't put all your eggs in one basket I mean this is investing 101 you need to make sure you diversify don't fall in love with the stock no matter how good no matter how solid you think that stock or that company is you need to diversify don't don't go all in don't go all in on one stock I'll give you an example you know unfortunately you know back in days you might have heard a company called Enron very reputable company until they found out it was a fraud

and then it went to zero you know there were very smart people investors to and cut the employees of Enron and you know what a lot of people employees of Enron they have stock options they have all their savings in Enron stock you know with their investments outside of their stock options they even bought more Enron stock there they are a hundred percent all-in on Enron which was once thought to be such a reputable name-brand company one day it was you know it was found out to be a fraud and I went to zero and

shareholders and people's retirements their savings were wiped out because they didn't diversify don't put all your eggs in one basket you need to diversify because even if you think that stock is untouchable if you think that stock is impossible you know to go down to go to zero it's possible anything's possible you're reducing risk by diversifying and spreading your investment across multiple companies because the chances of one stock going to zero is much greater than a hundred stocks going to zero so you need to diversify don't make that mistake investing mistakes number nine look at

the volume this is super important because you want to make sure that you do not get stuck in that stock even if you buy a stock and the stock skyrockets but there's no volume you would be stuck in the stock and you couldn't even get out of that stock you could not sell that stock for a gain it's because it's not liquid it's because there's no volume so what does this mean in plain English it just means that the volume is the amount of shares of that stock that are trading on any given day so

you need to pay attention to the volume of the stock and the average volume of the stock if the average volume of the stock is very little then you need to be careful because if you bought that stock you might be trapped in that stock meaning that you could not even sell that position so I mean it really depends on you if you run across a company or a stock with an average volume of less than ten million dollars be very careful so how do you calculate that so you look at the average volume of

the stock let's just say a million so if the volume is a million that means a million shares of that company trades on any given date that's the average and then multiply the volume times the share price so let's just say the share price is ten dollars a share so if you have a million shares trading each day at ten dollars a share then the volume is ten million dollars worth of that stock trades on any given day therefore you know if you want to if you want to sell your stock if the average volume

is about ten million then you can probably easily get in and out of that most companies on the nyi sieved the Nasdaq New York Stock Exchange or the Nasdaq date the volume it's going to be in the hundreds of millions or even the billions but I mean if you are looking at a stock that has volume in dollar values in the tens of thousands or hundreds of thousands that is a that is a red flag because again it might be a trap because you will literally be trapped in that stock and you could not get

rid of it even if you wanted to investing mistakes number ten if you do not have an emergency funds that is a mistake that is a problem because what's gonna happen if you do not have an emergency fund and you're facing an emergency what source of cash are you gonna be looking for you're going to be looking to liquidate your stocks you're going to be looking to sell off your stocks so if you don't have an emergency fund you're gonna sell off your stocks and it might be a bad time to sell your stocks if

you needed money right away and you didn't have an emergency funds and let's just say the stock you know wet down sharply and you would thought you know if you wait a few weeks or a few months or for the long run it'll recover and I'll probably do really well but if you're in a tough spot and you need money and you don't have an emergency fund guess what you're gonna do you're gonna sell the stock at probably the worst time when the stock price is so low and things did not pan out the way

you want it because you didn't have enough time because you needed the money now because you didn't have an emergency fund I hear that story all the time it's just it's just how things work so if you do not have an emergency funds you should probably build that up first before putting money into the stock market that's just my recommendation I hope you enjoyed these investing mistakes I hope you learned something and hopefully you can apply these to make yourself become a better investor especially if you are new to the stock market if you do

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