Stock School Video 5: Be humble when investing

Lars Tvede gives you tips in the Euroinvestor Stock School to improve your investor skills. Part five is about the attitude towards investing. Lars gives examples of classic mistakes.

"We overestimate our own investor skills"

  • We cannot manage to stand on the sideline and stay outside of the market. We get exposed to the market, even when we don't have any great investment ideas.
  • We trade too frequently...because we do not understand that a moderate knowledge and insight is not enough. One must know more than many of the most talented professional investors to beat the market. Those brightest professional many have a sky-high IQ, access to the best information and an extreme self-control plus years of experience, which is hard to beat on a regular basis.
  • We believe that because we're good at something else, we must also be good in stock trading.
  • We think we understand monetary policy better than central bankers and stock markets better than Warren Buffet.
  • We take huge positions, because we feel that a trade is the next big winner. If we make mistakes, we believe that we actually knew in advance that we were wrong.
  • We buy or sell our entire portion of a security, instead of varying the size of the position from a balanced view of probabilities and risks.
  • We use the same tactic, whether the market is in a trend, a consolidation regime or in a trend reversal.

 

Learn more about investing
You can buy book The Psychology of Finance, by Lars Tvede here

Or see the latest book by Lars Tvede: Super Trends - Winning Investment Strategies for the Coming Decades

 

Click to see more videos from  Euroinvestor Stock School

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