He may be the greatest investor of all-time … but even Warren Buffett makes mistakes.
In fact, the “Oracle of Omaha” has a long list of investment-related regrets. It includes:
- Missing opportunities to invest in both Amazon and Google.
- Investing in companies that he wasn’t familiar with in manufacturing, service and retail.
- Buying control of Berkshire Hathaway when it was a failing paper mill in 1962 — a move that cost him about $200 billion in the long run.
These are just a few of the decisions over the course of his career that Buffett wishes he could take back.
And if the world’s most successful investor has made so many mistakes, what hope is there for Main Street investors like us?
Especially new investors who are just starting out?
Well, we may not be making $200 billion mistakes … but we can certainly learn from the mistakes of others.
And at American Investor Today, we want to show you that it’s never too late to learn something new. We bring you Wall Street ideas, made Main Street simple.
Whether you’re new to the markets or you’re ready to keep learning, we want to show you the most common missteps of new investors … and how you can avoid them.
Mistake No. 1: Overpaying for a Stock
One mistake is buying when stock prices rise.
A lot of people see high stock prices and buy, buy, buy. They don’t want to “miss the boat” on profits.
My colleague Lina Lee wrote about this just the other day … and she warned readers not to chase stock prices.
Think about it…
In any other situation, people look for something to go on sale before they stock up on it.
When you need to buy gas, will you buy it at a station where it’s heading higher and higher … or will you go across the street where gas is selling for $2?
As my boss, Wall Street veteran Charles Mizrahi, always says: Even a great company with a high valuation will produce terrible results.
Instead, you want to buy fantastic companies when they’re trading for bargain prices — below their underlying worth. Then, you sit back while the market realizes the company’s value — the profits will come.
These opportunities may not come often, but they’re worth the wait.
Mistake No. 2: Selling Quickly
Another thing new investors tend to do that hurts their moneymaking potential: They sell too quickly.
At the slightest drop in a stock, they panic — afraid that it’s the start of a downward spiral.
And while selling out might seem like an easy way to avoid a loss, this is no way to make long-term profits.
As subscriber Scott C. said:
The one thing I have learned… is patience. Once Banyan Hill recommends a stock, you must be patient because the markets move up and down, but your picks always end up skyrocketing higher. I will continue to buy stocks your service recommends, as I have done very well over the years… Thank you for all the great services you offer!
We’re glad you mastered this step, Scott! You’re well on your way to a lifetime of profits.
The truth is that stocks aren’t just wiggles and jiggles on a chart — they’re pieces of a business.
So, as long as that business is rock-solid, it’s only a matter of time before the stock price rises to meet its underlying worth. If that changes, if the business becomes less solid, then investors should consider selling. Otherwise, price moves are just noise.
That’s why patient investors like Scott — those who invest over the long term rather than the short term — make real money.
Mistake No. 3: Not Following an Plan
And finally, if there’s one sure-fire way to lose money in the market, it’s by investing without a solid approach.
Without one, many new investors end up taking stock tips from anyone, anywhere. And that kind of investing leaves you with willy-nilly returns.
You need to have a plan.
As one of our new subscribers, Gary J., told us…
I’ve tried investing on my own now for about a year. I made nice little gains followed by bigger losses. I read every book and followed a few gurus with no luck. I was looking for one last go of it before I was going to quit when I found you…
Gary didn’t have a plan … and it hurt his portfolio.
But if you follow our favorite approach — picking a company in an industry with a tailwind pushing it forward, that’s being run by a rock-star CEO and selling for a bargain price — you’re going to profit.
This is the approach that Charles has honed for nearly 40 years: the Alpha-3 Approach.
And it’s made his readers some serious money.
And those who follow it have already seen the kind of returns this approach can hand you…
After three months with Charles’ Alpha Investor research service, subscriber Tim P. reported 44% gains in one of his positions.
Karl B. saw gains of 22% for his portfolio in just two months.
And in just a month, Jeffry M. saw one holding bring a 23% return!
By following Charles’ Alpha-3 Approach, you’ll never be tempted to overpay for a stock or sell too quickly again.
And if you avoid these common mistakes in the market, you’ll set yourself up for more safe and consistent gains.
So, if you want the opportunity to follow Charles’ research and recommendations and start profiting today, don’t hesitate — join the Alpha Investor family today!
Assistant Managing Editor, Alpha Investor