We all invest our money in companies that are valuable and give us a good return. But in a rush to gain profit, many of the investors make little mistakes, which a value investor shouldn't avoid. Let’s run through some of the common mistakes to avoid while investing your money in stocks.

🔶 Don’t focus on price

As a value investor, don’t get too interested in price movement but instead focus on the business fundamentals for the long-term growth of your portfolio.

Many people often misunderstand the relationship between stock price and valuation by referring with historical price movement.

Stock Price ≠ Valuation

Higher stocks don’t mean overvalued, and lower stocks don’t mean undervalued. Only business fundamentals defines the investment results.

Example: Amazon.

Inverters shouldn't focus on price moments, as sometimes prices will go up and down for no reason. Also, the media will always find reasons to match the price movement.

Acquire the ability to think independently and focus on the business. Short-term price movement has zero impact on your investment results if you look at it from a long-term perspective.

🔶 Don’t be jealous of people’s results and expect instant results

Have you heard about investors earning a lot of money through trading or cryptocurrency and getting 100% results in one month and feeling like losing? 

(As a normal person, it is normal to feel this and feeling of earning money as fast as possible.)

Investing ≠ Racing

There is no point in comparing yourself to other people when you yourself know you are doing the right thing.

Meta and Google Ads show us making money in 3 months, etc. are the noises that can affect the mind and make us feel jealous. Once you start feeling this way, you start to make irrational decisions. Then you might invest in something you don’t understand or try to find shortcuts to earn more through investing. Investing never works this way.

Value investing is a technique that can make you wealthy in the long term. Focusing on short-term results and ignoring long-term results is not what investors desire.

Investing is a long journey and requires patience and hard work. 

Never envy other people; instead, focus on improving our knowledge and mastering our investment mindset and skills.

🔶 Don’t buy without doing your own research

During your investment journey, you may come across lots of social groups, either through telegram or Facebook groups, talking about “why not miss this stock” or introducing you to new stock. You might begin to be influenced by their options, which makes you buy stock without doing your own research.

You might think there is no need for research, as others have done this for you. This way, you may lose money in the stock market.

Do your personal research before investing due to conviction. Conviction towards the stock but not conviction of others.

Many people lose money because they have no conviction about stocks, are lazy, and do not have the ability to think independently.

So when the price declines, they are the ones who sell their shares in panic and lose money because of a lack of conviction and because they don’t fully understand business.

Listening to others is a good way to learn about new stock, but after that, you should do your own research to fully understand the business. Understand the business fully and generate your own ideas for the stock.

Only until that moment will you have a strong conviction to decide whether you should buy it or not. Different people have different ideas and investing strategies that are suitable for them but not for you. 

Social groups have too much noise and non-beneficial information and are not going to help much in investing careers. It is much better to practice independent thinking, as there is no shortcut to investing.

🔶 Don’t use leverage to invest.

While going through the investing journey, you come across leverage. You might be wondering what leverage is.

Leverage is an investment strategy that uses borrowed money to invest and increase the potential return on your investment. It is normal for a company to leverage their business to increase their profitability.

Why avoid leverage?

• Leverage uses money you don’t even own.
  Every investment has certain risks, and as an investor, your job is to minimize the potential risks and maximize profitability. Buying with borrowed money is a major risk. Example: Imagine a stock you bought with 50% leverage that takes a year to recover. Then you’re losing 2x-5x of your money to recover.

• Leverage changes overnight fees. Example: Imagine you are loaning a car, which means that you have to pay a certain percentage of the interest on the loan, and the same goes for your leverage. Money you borrowed will be charged overnight fees, depending on how much you leverage.

• Leverage consists of gambling elements. Normally, people who leverage are the ones who expect quick returns and are impatient. By doing this, they are betting their borrowed money with something very uncertain and high-risk
  

Buy what you have, and spend what you earn.

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