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This section is based in an article published in the LA Times on sure ways to lose money, we believe that by knowing how to lose money, all of us will learn how to make money.

How to Loose Money

 

1.- Invest in the short term.

Rely on those experts who say the U.S . stock market is headed for trouble and either completely replace your portfolio with "hot" stocks, or sell all your holdings and go to cash. That same bunch of experts never predicted the 1997 Asian crash, gold prices plunging to a 12 year low, or the Dow Jones industrial average rising by more than 20 % for three years in a row.

2.- By all means do not diversify.

Concentrate your investments in a few industries. That way, if your holdings are in an industry that takes a dive, so will you. It is especially painful if over half of your investments are in your own company's stock and its price per share collapses.

3.- Get emotional about the companies you own.

Falling in love with them helps you lose your objectivity, which often leads to losing money. Buy only lousy companies. Buy them because their stocks look cheap. You can lose all your money in low priced stocks because the companies may be poorly run and or have poor business prospects.

4.- Do not worry about commissions or fees.

Heavy buying and selling brings prosperity to your broker and/or financial adviser, not necessarily to you.

5.- Do not worry about the tax consequences of your investment strategies.

Uncle Sam and many states will get their share whenever, for whatever reason, you sell stocks for a gain, so if you do not need to sell them keep them.

6.- Welcome tips from cold-calling brokers.

If you ever buy a security from someone who rings you on the telephone whom you do not know and who does not know you. you deserve the loss you are very likely to suffer (this include the internet, with out doing your homework).

7.- Do not trust yourself.

Do not trust your instincts and the freedom you have to invest the way you think best. After all is your money, and it is only money.

8.- Dwell on you past investing mistakes.

The more time you spend lamenting your losses, the less time you will have for learning new things about the market.

9.- Go ahead and invest only in mutual funds.

Believe their ads telling you about exciting performance, but just remember that over the last 35 years only 23 % equaled or beat the market. Bear in mind that in the last three only 13.5 % did.

 

 

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