Seven losses, two breaks even, and one win - this is a statistic for all investors. From this data, it can be seen that investing is quite difficult and particularly tedious. Regardless of whether you are investing in startups or in stocks, bonds, and futures, most people do not make money and suffer losses. Many people invest in starting businesses and opening companies every day, with 90% of these companies failing within five years. Most of those who open their own stores do not survive more than half a year before closing down. In today's investment environment, money is increasingly hard to earn.

For instance, in the past, one could "blindly" apply for new shares, but now the environment for new share issuance has changed. There are occasional instances of new shares breaking even on the first day, which has completely cut off the financial path for those who blindly apply for new shares.

In such an investment environment, if one still makes mistakes, then losses become a common occurrence. Today, let's discuss some common mistakes we often see in investment activities:

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The first common mistake is overestimating oneself. As the saying goes, "a newborn calf is not afraid of tigers." People who are new to the field usually enter when the bull market is nearing its end. After tasting some initial success, they may think that Warren Buffett's annualized return of over 20% is nothing, that it's too low, and they want 100% or 200% returns.

Investing in stocks seems too easy; no matter what stock you buy, it goes up. They might think, "I knew it, I shouldn't have been working. I could have just been trading stocks every day; this money is too easy to earn." They have long forgotten the earnest advice of experienced investors.

Human greed, in the context of investment activities, can be ruinous once one has tasted success. When their paper profits are substantial, they may think that their capital is too small and that borrowing money to buy stocks would yield even greater returns, or by selling their house and taking out loans to increase their capital. With the stock market's current upward trend, they could become billionaires in just a few months.

Many people, harboring such dreams of getting rich, fall into an abyss of debt within a few months. The extreme ups and downs of such situations can easily break a person, and their entire life could be ruined.

The second common mistake: forgetting the pain once the wound is healed. It is said that a fish's memory only lasts for seven seconds!However, in the investment market, many people's memories are like those of fish, forgetting the pain once the wound is healed!

Mistakes made in the past have not been corrected, but instead are repeated in various forms. Why does this happen?

This is a habit of human nature. As the saying goes, it is easier to change the landscape than one's nature. Driven by this habit, they end up making the same mistakes. This is akin to a rural saying: a dog may travel a thousand miles but it won't change its habit of eating feces, and a wolf may travel a thousand miles but it won't change its habit of preying on humans.

Good habits, once formed, can benefit a person for a lifetime, while bad habits, once ingrained, are extremely difficult to change.

This behavior is not only evident in investment activities but is also commonly encountered in our daily lives. For example, a person with a smoking habit knows it's not good, vows to quit, but breaks the vow the next day. How many people can truly quit smoking?

Too few!

In investment activities, chasing rising prices and selling off falling ones, catching falling knives, thinking that after falling so much it must have hit bottom, and rashly grabbing stocks that are still falling, leading to excessive financial bleeding. Peter Lynch once said that falling stocks are like falling knives; wait until the knife hits the ground before picking it up, rather than trying to catch it mid-air.

The third common mistake: herd mentality.

When shopping, we often choose to consume products with high sales and good reviews. The underlying logic is that I may be foolish, but it's unlikely that so many people are foolish. Good products would have been discovered by them already, and a product endorsed by so many people can't be that bad!

However, applying this logic to investment and financial activities is not advisable, because in the short term, the stock market is a form of gambling, a negative-sum game. (Brokerage firms also charge transaction fees, so it's not a zero-sum game.) In this game, everyone wants to sell their stocks at a higher price to others, hoping to get a good deal for their shares. Many powerful market makers then start to hype these stocks, enticing the retail investors to take the bait. It's well known that retail investors are numerous, but this is their disadvantage, as their funds are scattered like sand, and their capital flows are often swayed by public opinion, ultimately becoming the "chives" that are harvested over and over again.This herd mentality is also exploited by many unscrupulous individuals who use public opinion to create momentum, leading many investors to blindly follow and end up in a disastrous situation, only then to check whether the company is legitimate and has the necessary qualifications. By that time, it's too late to take action.

The fourth common mistake: Lack of patience and frequent trading

In today's internet age, young people pursue the philosophy that speed is unbeatable, enjoying a fast-paced life, work, money-making, and spending. As a result, the consumption of meat, poultry, and fish, which are often laden with hormones, leads to early maturation in children.

Many people, in order to meet unrealistic life demands, consume credit in advance, and in investment activities, they hope to see a 10% increase the day after they buy. However, this fast pace often goes against the natural order, which ultimately leads to destruction.

Humans are a minuscule species in the grand scheme of nature, a fact clearly recognized from recent natural disasters such as earthquakes, typhoons, fires, tsunamis, and so on. We must have a reverent attitude towards nature and follow its laws for long-term survival.

The companies behind the stocks we invest in have a limited speed and amount of profit they can generate. However, the short-term price fluctuations in stock investment activities often deviate from the growth of the company's value, which is a result of speculation.

The most prominent behavior in speculative activities is frequent trading. This constant trading significantly contributes to securities companies and the state, as each transaction incurs a stamp duty and two transaction fees. The state and securities companies are grateful for your contributions!

You are a good citizen, but you are not a qualified investor.

The fifth common mistake: Making hasty financial decisions

Many people do not write a financial investment plan before engaging in investment and wealth management, leading to a series of errors.For instance, incorrect choices in investment types can lead to wrong decisions in investment cycles. Or perhaps selecting investment products that are not suitable for one's risk tolerance, where the fluctuation range of the product causes psychological stress. Or the returns of the investment type do not meet one's psychological expectations, and so on. These could be the result of making financial decisions without proper learning and understanding.

As our country's financial market develops, there is a wide variety of investment and financial products with confusing names. It is difficult to find suitable investment types without conducting a thorough research. When writing one's financial plan, it is essential to first understand the characteristics of the investment object, its investment cycle, the level of investment risk, and the rate of return. All these aspects need to be studied and understood in detail.

Once we are familiar with the object of our investment, we can then start writing our investment plan. This allows us to plan the investment cycle, the source of investment funds and cash flow, and the frequency of investment. By knowing ourselves and the market, we can target our actions effectively. This way, when we encounter some changes in investment activities, we will know how to adjust and not be caught off guard, which could lead to investment failure or even losses.

For example, if you have money that you need to spend in the short term, investing in money market funds would allow you to quickly withdraw this sum in the short term. However, if you invest this money in stocks and you need to spend it when the stocks are still in a loss, then you would be selling at a loss, thereby losing your investment principal.

Therefore, when deciding to engage in investment and financial management, do not make hasty decisions. It is necessary to have a clear investment and financial plan and to write it down on paper, creating your own investment and financial plan book.

Common mistake number six: not understanding reasonable asset allocation.

The purpose of investment and financial management is to make money, and making money is for a better life. If you invest all your money in a long-term investment type, such an investment can affect your life. Because accidents in our lives are everywhere, and we cannot avoid them. For example, if you get sick with a cold or fever, or if your car gets hit by someone else, and you do not have an emergency fund on hand, you may have to redeem a portion from your investments, which affects the investment plan and does not achieve the expected results.This refers to the allocation of funds outside of investment. The allocation of funds within investment is equally important. If you only invest in a single type, especially in stocks, and something goes wrong with the company, resulting in a scandal, then your principal could be lost entirely.

Investing carries risks, and the ability to control these risks is essential in investment activities. The main purpose of asset allocation and investment portfolios is to reduce the fluctuations in the book value of assets and to diversify investment risks.

Common mistake number seven: being stubborn, not correcting mistakes, and being irrational.

No one is infallible; everyone makes mistakes.

It is common to make mistakes in investment activities, but it is not advisable to be stubborn and refuse to correct them.

Our decisions are often made emotionally, but when we realize that our emotional decisions are wrong, many people lack the courage to correct them. Instead, they continuously seek "evidence" to prove that their initial decisions were correct. This is also an irrational behavior. Once emotions take over and the brain is controlled by feelings, the series of decisions made are mostly incorrect.

For example, during a bull market, influenced by those around you, you might buy at a high price, and the stock price is still rising temporarily. The rational operation should be to sell immediately and secure the profit. However, many people have a fluke mentality, thinking that the stock price will continue to rise and they want to sell at the peak.

This thought is good; it is typical of an idealist!

If everyone could buy low and sell high, then all investors would be the biggest winners. But who would pay for that?

Short-term trading is like gambling; there are winners and losers. Every day, people buy and sell, each believing they will make money. Those who just bought say those who sold are fools, and those who just sold say those who bought are fools. They are all voting with their feet, and in the end, the outcome depends entirely on luck.So, instead of making emotional judgments about whether the investment will continue to rise or fall, it is necessary to choose a reference for valuation in order to find the correct method of operation.

Of course, the choice of a reference is a matter of personal perspective. Benjamin Graham chose the yield of A-rated bonds doubled as his reference, while the price-to-earnings percentile valuation method opts for historical data.

There are, of course, other references such as peers, regions, countries, and so on.

One can consider these references comprehensively to derive a valuation result. However, the results obtained from different references may be the same or may contradict each other.

Common mistake number eight: Lack of investment strategy.

For office workers who receive a salary every month, a fixed investment plan is suitable. Many people, after persisting for a few periods, will stop investing if the investment falls and they suffer a paper loss.

The choice of investment strategy varies from person to person, from product to product, and from investment cycle to investment cycle. Only by learning and understanding the advantages and disadvantages of each investment strategy can one select the most suitable one. The investment strategy that suits oneself is the best.

Investment strategies include:

- Fixed investment with a set time, amount, and frequency.

- Flexible investment with no set time or amount.

- Flexible investment with a set amount but no set time.

- And the currently popular smart fixed investment.

Other investment strategies include grid trading, value averaging strategy, fixed proportion strategy, core + satellite strategy, and so on.