We have gone over the point that most people that consider themselves investors are doing nothing more than speculating. Let’s now look at mistakes you really should avoid if you want to go away from speculating and go into the realm of an intelligent investor. So here are the mistakes to avoid;

1. Believing you must predict the markets next go to make a excellent return on investment; if you could predict the future you might as well play the lotto. At the end of the day even the greatest investors cannot predict the future and if you are going to make strides in your investment career you will need to go away from the mindset that says if you can correctly predict the future you will succeed. Buffet for example clarifies his strategy of buying stocks by claiming to buy excellent Businesses for less than what he believes they are worth and then holding on to them FOREVER.
2. Believing that “Gurus” out there are better at picking stocks than you; many experts contradict their own predictions within days of making claims. Start paying attention to what the so called “experts” are saying and you will see that very few really have a clue about what they are talking about. Now, I know that everyone makes mistakes but if they are consistently getting things incorrect and consistently backtracking then they do not believe in what they are doing. I won’t mention names here but if you did a Google search on stock gurus that have fallen I’m sure some fascinating tales will pop up.
3. Believing that insider in rank is the way to make BIG money; The worst of the insider in rank persons are those who feel the need to boast to everyone they come across that they have bought or are thinking of acquiring stocks on which they received insider in rank on (from their brother-in-law who is a stockbroker… isn’t it always). They can end up convincing others through curiosity to invest in the stocks but rarely does it end well. If you are to become a fantastic investor you must avoid listening to such nonsense or at the very least (and I do mean at the very least) spend time analysing the investment with your own set of analysis
4. Diversifying; while this is technically excellent advice you have to do it in moderation. Warren Buffet famously only identifies 6 companies at a time he wants to invest in and then takes huge positions in these companies and therefore can make a killing since they are selected with care to ensure “risk is minimal while giving a excellent return on investment”.
5. Believing You Have to Take Huge Risks to Make Huge Returns; Remember there is always risk when it comes to investment and the likelihood is that stocks with explosive growth potential do tend to carry higher risk. E.g. Stocks in equipment start-up firms can be risky but can lead to explosive returns. But, as an investor it is your job to evaluate the amount of risk you are taking when investing in these types of firms. Having a system which looks at both the accounting numbers and the skills of the management team as well as other factors can help you reduce the amount of risk every time you invest.
6. Believing There Is Some Plug-in System Out there That Can Make You Millions; With the explosion of the internet has come a lot of in rank (which is excellent) and a lot of propaganda (which is terrible… oh the logic) and one of the propaganda’s is that there is some magic formula

As well as avoiding the above mistakes it is also imperative that you know and know habits that you need to do. I’ve always believed the best way to become excellent at something is to learn from the best in that topic. Why not learn from Warren Buffet on how to invest CLICK HERE! for more in rank on Warren Buffets investing style.