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Common Investment Mistakes During All-Time High – By Sidhavelayutham, Founder & CEO, Alice Blue

Bangalore (Karnataka) [India], February 27: The giant global equity markets of the world are trading at all-time highs these days. The Indian market is also leading those markets from the front and is continuously making new life-time high breakouts. Amid this scenario, a lot of investors get really concerned about the future of their investment. They get confused about whether to make fresh purchases/sell out/hold on to their investments and consequently commit mistakes. 

In this situation, the first mistake people make is ‘panic-selling’. Life-time high levels in the market do make investors uncomfortable about maintaining their status-quo. They start to believe in the famous saying of ‘Buy Low & Sell High’ and put it into action as soon as their first life-time high is made. 

Investors should always remember that wealth is generated over the long-term and not by buying and selling in short-term bull and bear phases. Hence, it is important that investors do not sell out their holdings in panic due to an overheated market condition and realise the full potential of their investments by getting multibagger returns over time.  

The second most important mistake is about ‘delaying new investment’. Investors start to feel content with the quantum of investment they made earlier when they see a new market high. This leads them to maintain their ‘status quo’ and stop fresh equity allocation. This decision leads to loss of compounding over time. If one keeps investing even in smaller corrections post one all-time high breakout, the law of average helps him/her reduce the overall cost per share.

Finally, one of the most common mistakes that investors make is ‘taking excessive risk’ due to the fear of missing out. People start investing more than what is permissible as per their individual risk profile. This leads to excess equity allocation and may lead to a loss of capital in times of correction. 

During these times, investors should always be very careful about investing in bad quality companies. These are the types of stocks which start running if a few other good companies in the same sector are doing well. 

The key thing here for investors is to stay disciplined and think about the long-term returns. This will help them ride the bull run phase with ease.  

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