Hi everyone, we have all heard about the systematic and unsystematic risks involved while looking into businesses, but the above two terms can also be associated with the mistakes that we make in investing, and I would like to share mine with you through this forum
Unsystematic Mistakes.
-
Choosing the right business but entering during peak valuations or overstretched margins - can be cured by understanding the technicals associated and understanding the strong demand zones on weekly and monthly time frames to enter for a second time and average down the buying price.
-
In the case of trend investing, picking the right trend at the right time but with the wrong companies, it is usually the derivative that plays out the safest rather than choosing the best player. Hypothetical Example - if one believes the fashion industry will outgrow, then choosing the company which produces raw materials for all the brands rather than choosing the right brand to invest in.
Systematic Mistakes;
-
Not understanding a business and investing in it - I have been the victim of the mentioned, especially trying to hop on the crazy gains in the chemical industry.
-
Buying Naked Options of companies based on some news and reports, that too without a hedge. Well, the destruction is self-explanatory in this case, as that is one of the worst mistakes that Fortunately I was able to afford and learn from and would recommend everyone to never try, is read some news or watch some channels and take actions based on them, especially using derivatives.
Would request everyone to share theirs as it would help the newbies avoid what we certainly couldn’t.
Subscribe To Our Free Newsletter |