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How Do Investors Lose?

It is a bad thing when an investor loses large sum of money.  I believe, one has already experienced that unless one is very new in the financial markets.  One can argue and say Oi, I already know how I lost as an investor.  Why is it important to know how investors do lose?

Well, stay with me please, and you will understand more.  One of the advantages of knowing how investors lose is to avoid the same mistakes or learn from them in order to craft better a investment strategy.
It will surely help many to improve, and become more astute markets player.

1/ Gambling As An Investor

Let us just say that investing has nothing to do with gambling, otherwise no one would make profit investing.  Though, luck does help under pressure investors, luck is never the motif to buy and hold a financial asset.  One is likely to gamble as an investor if one does not know how to learn.

If one has been gambling in the financial markets profitably, one is a very lucky being.  

However, one should not be fooled and believe that it will always be the case.
Many will thank me few years down the line for sharing my thoughts on gambling as an investor.

2/ Investing Without A Viable Strategy

If you ask hundreds of successful investors if they have viable investing plan, they will all say yes.  Most investors who are cleaned by the markets do not have a viable investment plan.  They are tossed around by all winds in every direction.  It is just like going fishing without fishing tools.

One must have a viable investing strategy or tool

3/ Investing At The Wrong Time

I can not blame traditional investors who solely rely on the book value or balance sheet in this case because they do not understand much about market timing. They have to learn it or outsource that service.  

One can buy a financial asset below its fair value but still be in the red for many years because one does not time the market more precisely.  The wrong market timing can be costly if one buys an asset in the fifth Elliott wave.  

Yes the company is still generating more revenue, has a strong balance sheet in a bullish market, but the timing was wrong and one takes huge losses.  

A recent example of wrong market in 2019 was Bitcoin.  Many investors bought Bitcoin at the end of the 5th wave and many have lost.  Those who hold on may have to wait at least seven years for the price to go back to the prior highest price level (of that 5th wave) on the monthly chart.

4/ Investing At Wrong Price

This is one the investing mistakes that many has been making time and time again without realising.  They were correct about everything that an investor ought to do, but just fail to buy assets at the right price.  

Indeed, buy low and sell high tips hold nicely in this case because highly sophisticated investors do not buy at any price.  Please be patient and know that if one misses that opportunity, there will be another one right in the corner.  It just like missing your first train but not the last one.  

Value investors are very competent when it comes to buying below the fair value of the asset.  They often do everything that they can to buy financial assets at a discounted price.  

The good thing is that only the financial markets that allow one to buy something that should be priced at 50 Dollars at 30.  Isn't it great?
It is important that beginner investors realise that market participants do use many other tools to uncover oversold or undervalued assets.  Technical investors do wait for a pullback before they buy.

There is always a waiting period.  One wants to buy but sometimes one has to wait until the price is right. Even after the waiting time if the price is not right, one may skip it.  I hope you you it, but there are more to learn about investing in a financial asset at the right price.  If that was your number one downfall, please do something about it and do not stop learning.

5/ Investors Without Knowledge And Skills

It is never too late to learn and train.  The easiest way to get there is to apply for any position in a company that is offering a free training or education on the topic one is interested in.  That is great because one gets paid a salary, but one is also trained and given free education that matters to one to become a winner investor.  

Isn't that beautiful?  In London where I l live and Switzerland but also USA, employers do take intelligent people without qualifications, and trained them in the way to wake up the real genie in them. 

Also there are many YouTube channels that offer free training.  I love YouTube.  In fact there are so many online educational materials that can help.  One does not have to be lazy or keep investing without the best education.  

The education is the first step.  Subsequently, one must use a demo investing account to increase skills and experience.  Please note that the accumulation of the knowledge is the first step, but with more hard work and experience, one will gradually turn into an eagle-eye investor who can compete with the smart investors.  Please do not let yourself down. 

The lack of education, skills and experience is making many investors lose in the financial markets.  I would say this is the number one factor for many investment failures.

6/ Technical Investors

In the case of the technical traders who invest using technical analysis, the big issue is the refusal to combine technical analysis with the fundamentals.  It does work to use either strategy.  

A technical trader who engage in investing (buy and hold) will improve investing portfolio by using both fundamental and technical analysis.  What is holding you to become fluent in the fundamental analysis?   I was making the same errors years ago until I make the decision to stop.  I began to use google acid test and take into consideration the economic news' impact on assets' price.

To make a long story short, I am today a better investor than the one I was years ago.  It does not help to be a purest technical investor.  Truly, a technical or fundamental investor will do better if he or she fairly combines both.

7/ Financial Markets Cycles

The time table and seasons for both bullish and bearish trends are hidden in the financial markets cycles.  The topic of market cycles is a bit complex to many.
Nevertheless, one of the simplest market cycles is the Elliott wave cycle.  If one only begins to learn about the Elliott theory, one will improve market cycles timing, and avoid being cooked in hot water like a crab.

I have heard people calling the Elliott wave forecast a mambo jumbo, but they are wrong.  Smart Elliott wave traders and investors have an edge in the financial markets today, and will always have because they know the Elliott wave cycles.  

I will not go further on this matter, but one should realise that market cycles do help to invest profitably in a timely fashion

Conclusion

When an investor knows how most investors do lose, he or she is no more the same investor because he or she becomes wiser, smarter and efficient.  An investor can carry on losing just because he or she does not know what he or she is failing to do or know.

What one does after learning these things will help one to become a smarter investor.

I hope you will find this article useful, and make the best use of it to boost investing portfolio.  If you like the topic today, please share it on your favourite social media, and talk about us in various investing and trading forums.  I will appreciate that.
Happy Investing To All.

This article is written by G Beaulieu 
Founder of Stochastic-MACD.com