Investing is a dangerous game – even for the most talented players. But by studying the greats and their greatest blunders, we can benefit from their mistakes without the million-dollar price tags. If you’re an amateur, you should focus on avoiding unforced errors rather than shooting for big wins, and if you do win, stifling overconfidence is crucial. Above all, don’t become attached to your assets: emotions like fear, anger, envy and greed are your portfolio’s worst nightmare.
What you can do:
Exercise due diligence and don’t over-trade.
If you’re new to the world of stocks and shares, you should know that making too many trades is one of the most common errors. Like a true venture capitalist, you should exhaustively research every company you plan to invest in and don’t be afraid to walk away. Warren Buffett once suggested that investors should act like they are only permitted to make 20 trades in their entire career. This way, you exercise extreme caution and keep yourself focused on high-quality trades.