Suze Orman: These Are the 3 Biggest Mistakes You Can Make as an Investor

Core Insights - The article emphasizes the difficulty of following the basic investment principle of "buy low, sell high," highlighting that many investors end up losing money despite their best intentions [1][2] Investment Behavior - Personal finance expert Suze Orman discusses common mistakes investors make, particularly the impact of fear on investment decisions [2][4] - Investors often fall into two categories: those who hold investments regardless of market fluctuations and those who sell at the first sign of a price dip [4] Myopic Loss Aversion - The concept of myopic loss aversion (MLA) is introduced, describing how investors focus more on short-term losses rather than long-term gains, leading to premature selling of investments [5] - Orman's observations indicate that clients who maintained confidence in their stock selections and held their investments generally earned more than those who sold out of fear [6] Investment Strategy - DALBAR's analysis shows that an investor with $100,000 who held onto the S&P 500 throughout 2023 would have earned $26,288, resulting in a total of $126,288 by year-end, emphasizing the importance of holding through market dips [6] - A suggested strategy to combat fear is to reframe risk as a potential opportunity for reward, which can help investors maintain their positions and achieve greater long-term profits [7] Focus on the Present - Investors are advised to concentrate on current investments rather than dwelling on past performance, as this can distort their decision-making process [8]