Investing Mistakes to Avoid
Ideas for the investor
Author: Dr. James Spruell
James Spruell, Ph.D. is an author, educator,
consultant, and featured/invited speaker.
His speaking engagements have taken him
across the globe from Kansas City to
His vast consulting experience provides unique
insight into the real life problems faced by so
The contents of this presentation are
intended for discussion purposes only
Review with your financial advisor any ideas for
their suitability of your personal situation
Not Knowing Your Risk Tolerance
Investment has risks – know your tolerance
Risk tolerance assessments to estimate your
tolerance level are available (try google…)
Understand the impact of an investment gone
Ask yourself how would this affect my
immediate, long term, retirement plans
And is it still a good investment for me…
The Blind Side
Over confidence in our own abilities, experiences;
We are sure we can pick a bottom, catch a falling knife, or just know that
Company ABC is the next great winner;
Can be a factor in trading too frequently;
Falling in love with a company – the company may be great but for a
variety of reasons my not be a good investment
Avoid basing an investment decision on picking the bottom, catching a
falling knife, etc.
Do plan a regular review/rebalance of your portfolio and strategy
appropriate for your investment goals (and yes, review these with your
Diversity, Diversity, Diversity
Failing to diversity can be fatal;
Returns can be really good …for awhile, …then came the Dot.com bust…
Choosing two stocks that are highly correlated is not diversity
Make sure that you understand the industry you are investing in, e.g. be
careful about investing in commodities unless you/your advisor
understands how commodities work
Using indexed funds, ETF’s as a portion of your portfolio can help, e.g.,
SPY is a basket of stocks matching the S&P and provides a natural
Decide on what portion of your portfolio should be in bonds (Treasury or
Corporate), cash, real estate, municipal bonds, etc.
Holding on to an investment when the market, underlying
industry, has changed substantially
Pride can be an awful thing in finance, and the cold market can relieve us
rather quickly of the burden of investing when we hold on to stocks that
have clearly gone south. It's a sunk cost, and the sell button must catch
up with the pride button!
While the market at the end of 2017 was at all time highs, does not mean
that stock purchased in 2000 was…
When you realize a mistake has been made, the underlying industry has
changed, etc. make the change. Again, this is where a regular scheduled
portfolio rebalance has value along with a good financial advisor.
Attempting to Time the Market
Market Volatility is built in
Attempting to time the daily, short term Market swings, etc. is extremely
difficult in a market of professional traders, algorithms,…
Periods of structural problems, e.g., the dot.com, liquidity crunch of 2008
is not a random fluctuation but is also fairly rare
A regular scheduled portfolio rebalance along with a good financial
advisor can help you spot the difference; The decision is yours but those
structural problems are infrequent and often not very visible.
Almost always a long term investment plan will win out!
Not Having a Plan
‘Ya gotta know where you want to go!
Plan for your future to meet your goals, expectations risk tolerance, and
asset allocation decisions,…
Doing nothing is not a plan
Not keeping your plan up to date or doing due diligence
Set a regular review of your plan and update it as necessary.
Don’t over rely on a financial advisor – it’s your future and plan!
A Written version is available at