When it comes to buying stocks, there are many different investment strategies that you can choose from. The key is learning from your mistakes and becoming a more disciplined investor in the process. However, just because you've been able to turn a profit from buying a stock doesn't mean there is nothing to learn, or that you've got it all figured. One of the most dangerous things you can do in life is to confuse luck with skill and ability, and it's no different when it comes to investing.
The moment that you think you've figured out how to profit from investing is probably the time you should step back and take a closer look. It's tempting to think that gains will never turn to losses, but it's irrational to assume that a stock will just keep on increasing in value.
A good example is what we saw happen with Bitcoin. After reaching highs of nearly US$20,000, the cryptocurrency has faced a lot of adversity and many companies are distancing themselves from the high-risk financial product. Ads have been banned on many outlets and a negative outlook for Bitcoin has resulted in it now falling to under US$9,000. At its peak, investors likely saw the cryptocurrency as being unstoppable, except that it never was.
Speculation can only fuel prices for so long before reality starts to set in, and we saw a similar fallout with marijuana stocks this year.
