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Value Investing in Growth Companies: How To Spot High Growth Businesses and Generate 40% to 400% Investment Returns by Rusmin Ang, Victor Chng

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Chapter 10

Avoid Common Mistakes

The Dos and Don’ts of Investing

To become a successful investor, we need to know why most investors fail. In doing so, we hope to learn from someone else’s mistakes, so that we can be spared from making them. In fact, it must be said that most successful investors, such as Warren Buffett, John Neff, and Peter Lynch, are able to beat the market countless times, not because they are smarter, but because they have learned from mistakes they made along the way. So important is learning from failure that Charlie Munger, vice chairman and partner of Warren Buffett at Berkshire Hathaway, first studies how a business can fail before exploring ways that it can become successful. In other words, he would first learn about potential risks, so that he can understand and avoid them. Considering how this approach can add value to our investment strategies, this chapter will be dedicated to unraveling some of the common mistakes in investing.

Mistake 1: You Think You Are a Long-Term Investor but You Are Really a Speculator

You may think like a long-term investor but act like a speculator who deals in the stock market. In that, you make your investment decisions based on the rise and fall of prices. However, if you are truly convinced of the prospects of being a value-growth investor, you should use the tips presented in this book and curb your speculative ways. Speculation is a risky investment strategy in which you tend to move with the crowd (herding) rather ...

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