Giving out lists of mistakes that investors make is a common thing advisors do at investment conferences. One of the most popular lists is the one put together by Investors Business Daily. I've attached their list below and then give my thoughts on what I believe is the biggest mistake that investors make. The list contains links to the IBD website, where each point is discussed in more detail.

Investors Business Daily's “The 10 Biggest Mistakes Most Investors Make”

1.
Buying low-priced stocks

People are drawn to bargains like moths to a flame.. But when it comes to investing, all too often you get what you pay for.

More

2. Using fundamental analysis only

 Looking at charts of past market leaders shows you what to look for today when trolling for a new crop of winners.

More

3. Buy and hold

Holding leading stocks is often easier when the market's heading up, but in a bear market holding losers will wipe you out.

More

4. Averaging down

Some financial gurus would have you believe that averaging down is the silver lining in a declining stock.  The average cost for your holding, therefore, goes down. But that strategy rests on two big assumptions.

More

5. Not having an exit strategy

Knowing when to sell your stock is as much a skill as knowing when and which ones to buy. A key investing rule is to cut your losses quickly.

More

6. Focusing on low P-E stocks

A common mistake among growth investors is to ignore stocks with unusually high price-to-earnings ratios. Truth is, many of the best stocks tend to command a premium because of their outstanding growth. 

More

7. Buying stocks in a down market

A falling market makes owning stocks a risky proposition. Three out of every four stocks follow the broad market's trend.

More

8. Focusing on dividend-paying stocks

Dividend-paying stocks can sometimes provide a steady income stream for risk-averse Investors. But dividend yielding stocks sometimes go down. For growth investors, they may also produce smaller potential gains.

More

9. Falling in love with a stock

One prominent school of investing favors an impersonal approach to stock picking. Let the numbers dictate what you buy and sell, goes the theory. Do not fall in love with your stocks and don't let fear and greed enter into your decision making.

More

10. Paying too much attention to insider selling

For decades, people have spent endless time and energy searching for an easy way to time the market. Oscillators, sentiment indicators, and insider selling gauges have all been treated as reliable primary signals to buy and sell at the right time.

More

My take:

The truth is 50% of the people who enter the stock market lose money. Less than 25% beat the returns of the market and only 5% experience exceptional returns. The reason why is that most investors do not take the market seriously. They literally throw money at the market and expect to make money without any planning or research. They buy because of a tip, magazine article, a good earnings story, or because some talking head on TV tells them to buy. They make no plan on when they will sell for a profit or when they would take a loss. As a result they just end up buying and hoping for the best. If they are lucky and get in a good stock they become true believers and just hold on forever, which means they hold on too long. When the next bear market comes along they lose all of their profits.

All of the mistakes amount to a lack of planning. They invest with no strategy. The only way to be among the top five percent elite traders is to educate yourself on how the stock market works and as you learn about the market to build a strategy that will work for you. That is all there is to making money in the market, but most people never do this. Either they are too lazy or simply too intimidated by the market. They don't believe in themselves and therefore place all responsibility for their investments in the hands of TV talking heads, stock brokers, or investment advisors, who many not know anymore about the market than they do.

In order to make money in the stock market you have to take responsibility for your own investments. By signing up to this free weekly newsletter you are taking a step in that direction. I can help you even more if you sign up for my stock market mastery course, which is included in the WSW Power Investor paid membership. It includes a 30-day risk-free trial. If you aren't happy with the course and service you cancel. Then let us know and we'll refund the money back to you. To sign up just click here.

There are more mistakes that successful investors make too. I'll discuss them with you in a future article.