By Don Chiodo
It’s easy to have confidence in investments made during bull markets: share prices climb and any losses from poor decisions are usually recovered quickly. But times of increasing market volatility tend to magnify mistakes, and many investors may lose confidence in their decision-making. Let’s take a quick look at one of these common – but generally avoidable – mistakes.
Skipping the Research
Determining whether an investment is appropriate for your portfolio requires research. There are more companies and investment products to invest in today than ever before, and you need to gather information before you can determine which investments might have potential for growth.
Before making an investment decision, it’s helpful to evaluate it in the context of comparable opportunities. At a minimum, you should find two articles (from different authors) about the company or investment product and review the company’s website. Both the investor relations section and news announcements found on the website can provide useful information. You should also review financial statements and carefully investigate anything that looks vague or unusual.
Not only can doing your homework help you to make informed investment decisions, it can also help you to feel comfortable with the holding in spite of temporary ups and downs.