Investing in Canada is a terrific way to grow your money and set yourself up for a secure future, but you need to make sure that you avoid falling into certain common traps. The major difference between successful entrepreneurs like Nicholas Kyriacopoulos and those who struggle in the market is the ability to discern the difference between a reasonable risk and a trap. The information presented here should help guide you in determining the best way to spot investment traps and avoid falling into them yourself.
Fear of Missing Out
One of the biggest traps that an investor can fall into is abbreviated into FOMO, for fear of missing out. This happens when an investor sees a surge in a market and gets the urge to jump on after the wave has already crested. Most often, it results in getting on board too late and watching your money shrink because prices drop. Experts like Nicholas Kyriacopoulos got where they are today by identifying the right time to jump on board with a stock, not chasing trends as they reach the height of their possibility. You can avoid this trap by having faith in your investment plan. Stick to the model that has brought you success and ignore the crowd. Many of the people who fall into FOMO wind up investing too much too late and losing money because they pursued a hot tip over their own strategy.
Anchoring
When a stock reaches a certain value, there is no reason to believe that it will return to that price again. Spikes and fluctuations happen, and past performance does not indicate future results. Despite this common knowledge, many people fall into the practice of anchoring. This occurs when a stock hits a certain high point and then corrects closer to its market value. Investors then buy shares of that stock in the belief that it will return to its previous high point and leave them reaping the rewards. Don’t fall into this trap. Rely on trends and market knowledge rather than one-time surges. If you wind up buying into a stock under the conviction that it will return to a high that it is nowhere near, you are setting yourself up for disappointment.
Confirmation Bias
Nicholas Kyriacopoulos and those who have experienced similar success know to let the data speak for itself and follow facts, whether those facts are convenient or not. Not everybody follows this code of behavior, often to their detriment. Sometimes, people let what is supposedly common knowledge or what they want to be true guide them over what they see with their own eyes. It’s not that they want to mislead themselves or others; it’s just that they develop blind spots around data that doesn’t match their conclusions. For example, if you are convinced that a FAANG stock is a good investment for quick profits, you might look only at the way it’s paid off for others rather than how they are actually performing in real time. This is known as confirmation bias, and it can sink otherwise successful investors. No matter how experienced you think you are in the stock market, never assume that you know everything and always follow the data in full rather than picking and choosing that which is convenient.
Knowing these common investment traps can help you blaze your own trail in the fashion of successful investors like Nicholas Kyriacopoulos. Remember to act using rational thinking and the data that is available to you. When you operate on fear, the false belief that something is “due,” or an unreasonable confirmation bias, you will struggle in the market.
