Investing in ASX shares is often described as a lifelong learning journey. And nothing could be closer to the truth. The reality is that, while we can learn to avoid the simplest mistakes, even the best investors make errors of judgement from time to time.
So today, let's discuss some mistakes that even the most seasoned ASX investors can be prone to make.
Being too clever
Once you think you have a handle on the whole investing schtick, it can be tempting to try and push the boundaries with what you think you are capable of. We're all told that 'timing the market' is a bad idea. But even sophisticated investors can fall into this trap.
Perhaps you have seen some inflation data or other economic statistic that makes you think a stock market crash might be coming, so you sell out of your shares. But acting along these lines is a sure way to lose money.
So make sure you stick to the basic rules of successful investing, because they apply to the novice and the expert alike.
Losing focus on the long term
The best investors tell us that a long-term investing mindset is the only way to go when buying shares. Warren Buffett's famous quote 'If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes', comes to mind.
But even the best investors can lose their focus on this important principle. Once you've been investing for a while, you tend to notice some patterns and trends in the market. Some investors try their luck on these kinds of short-term gyrations. But usually, they would be better off just sticking with quality businesses one can hold for decades.
Becoming obsessive with ASX investing
Investing is a fun, rewarding and lucrative hobby. If you're good enough at it, you can even make it your profession. But being 'too into investing' can be a risk for those who have moved beyond the beginning stages of their journey.
Again, let's see what Warren Buffett thinks about this:
If you buy a business, say you buy a farm, do you go up and look every couple of weeks to see how far the corn has grown up? Do you worry too much about whether somebody says this year is going to be a year of low corn prices because exports are being affected or something? You know, it does not grow faster if I go and stare at it…
Too often, investors who are obsessive with their investments confuse proper maintenance of an investment portfolio with action. If you're constantly analysing your share portfolio, you might get to the point of making changes just for the sake of it.
So if you find yourself checking your brokerage account five times a day to see how everything is moving it's probably a sign that you might want to take a step back and let the corn grow.
