Valuable insights: 5 investment mistakes to avoid
Our free information brochure shows you some serious investment mistakes that need to be avoided:
As an established asset management company with more than 20 years of experience and over 1,500 customers, Genève Invest is one of the renowned representatives of the financial sector.
Thanks to these decades of experience, we are able to give you, as a private investor, valuable first-hand insights into the area of profitable asset management.
Building capital wealth takes time, effort and knowledge. The same goes for administration. We are happy to pass on our knowledge to you in this information brochure.
Don’t just let losses take their course
While small profits are taken far too quickly, bad investments that are in the red are often held on for far too long, which can result in enormous asset losses. This is also largely psychological.
After all, the liquidation of a losing position means a defeat, which is only actually recognized when the losses are realized and the chance of a recovery with them is gone. “The battle is not lost until the capitulation,” as not only generals, but also investors all too often want to convince themselves. As a result, the losses keep growing.
It should be remembered that a position that is 10% in the red has to rise again by a good 11% in order to reach the starting level. If a stock is down 20%, it needs to gain 25% to avoid losses, and a 50% fall requires doubling. Even with a 90% loss, some investors are still hoping that the tide will finally turn for the better.
In order to avoid this situation, investment decisions for securities that are (more clearly) slipping into the red should be checked very carefully and, if in doubt, the emergency brake should be pulled in good time. Larger price losses that go beyond the overall market usually have a lasting reason, even if this has not yet been revealed to the investor concerned. In any case, an end with horror is better than horror without end.
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The Genève Invest Group has been successfully active in the field of asset management for many years and offers you valuable insights into the capital market. Find out why we have had corporate bonds in our portfolio for more than 20 years and why nothing will change in the future.
Strategically resist short-term profit-taking
In an ever faster changing world, security and validation are important basic human needs. This is also reflected in the stock market behavior of many private investors. Especially in uncertain times and in rather weak stock market phases, many investors therefore tend to hold on to or secure the profits they have made.
The easiest way to do this is to sell stock and bond positions that are in positive territory, albeit marginally. Small profits are therefore often realized much too early. Similar to winning the lottery or casino, the associated release of dopamine in the brain can promote feelings of happiness. At the same time, the investor receives confirmation that everything has been done correctly, and thirdly, there is a sense of security, since the money invested is now “protected” in the current account again. Of course, this overlooks the fact that the funds for generating income have to be reinvested, and the supposed security is only very temporary.
Investors should be aware of these relationships and hold positions that are doing well until the price target originally set or the fair value has been reached. Of course, this only applies as long as the assessment of the respective title has not changed to the negative.
At the same time, you should always be aware, also in connection with possible consulting clients, that frequent reallocations are by no means to be equated with the consistent actions of an active investor or asset manager, even if they suggest this. The resulting transaction costs (“back and forth empty your pockets”) should not be mentioned at this point […]