Several here have posted about how dumb most "investors" are in times like these. They panic and sell, then buy back higher later, and wonder why they can't make money. MSN says the same thing about panicky sellers:
"MSN Money asked financial advisers to list the five worst mistakes they warn their clients to avoid. Nearly all of the missteps originate in rash and emotional trading. In contrast, steady, conservative strategies that are appropriate in boom times -- spreading investments around, moving slowly but deliberately -- are still valid.
Such strategies might not be thrilling, but they do protect against major mistakes of the sort that advisers list among the worst investing blunders.
1. Panicking and selling
Leave now, lose now.
Abruptly dumping equities for cash is the biggest mistake individual investors make, advisers say. Why? Because fear often drives such decisions.
"The mistake is when people use their emotions as a driver of investment strategy," says Stuart Ritter, a certified financial planner at T. Rowe Price in Baltimore.
As a short-term fix for a short-term problem, a fast exit ignores the markets' propensity for long-term growth. Instead of preserving their money, investors who sell out in bear markets tend to make their losses permanent.
"After you sell, you say, 'I'll go back in when it goes back up,'" says Bob Glovsky of Mintz Levin Financial Advisors in Boston. "All you have done is sold low and bought high. Nothing fancy there."
Hanging on may seem counterintuitive when herds of investors are packing up, but history is on the side of the bullish.
Send stock manipulators to: enforcement@sec.gov-and to jail.
AI
