Failure to diversify is one of the major blunders being made by Investors, and this greatly affects their portfolio.
When one stock is doing badly, the other ones will compensate and that is the idea. Investment experts recommend new investors to invest inNot carrying out proper analysiSome investors still use the approach of herd mentality. These are the types of investors who totally make their investing decisions based on other people’s opinions. They don’t take time to make their independent research about the Investment they want to go into.
PE ratio tells you by how much a stock is overpriced and this shows investor confidence in the stock. It also tells you how long you have to wait to recoup your investment in the company, if earnings remain the same.A popular adage says he who fails to plan, plans to fail. Not having a plan or goal before doing something is like just moving without a destination.
Some of these penny stocks are issued in the primary market after Initial Public Offers and refuse to grow in value. They remain the way they are and even fall in price, hence becoming cheaper., you see some stocks with prices of N0.36, N0.2 etc. these are penny stocks. Companies with penny stock may be poorly managed, hence the lack of growth, or may not be adequately capitalized.
These risks could be market risk, regulatory risk, industry risk etc. Having cash in a backup emergency account is part of risk management because if there’s an emergency you don’t need to sell your stock. As time goes on, the security which has lost some value could become completely worthless if the underlying operations of a company are poor with no improvement.
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