Unfortunately, most people don’t get much of a financial education. There is no subject in school called “Financial Education” that teaches you about spending, saving and investing, even a good financial education is so important in life. Investors are left to figure things out on their own, through “Learning by Doing” which unavoidably can lead to some costly mistakes.
One of the biggest mistakes made by private individual investors is that they “water their weeds and pick their flowers”, meaning that they throw good money at bad money. They add more money to losing positions, while taking profits in winning ones. Even worse is, when they support margined bad positions by selling the profitable positions to meet their margin calls.
We all know that you actually should do exactly the opposite. This is how smart investors make their money.
Sven Franssen