How To Financially Benefit From The Mistakes Of Others

Monevator dishes out some general advice on stock investing to keep in mind as the economy (hopefully) starts to turn around and investing no longer becomes a bottomless money pit.

The theme is not to be stupid and buy and sell stocks with your brain rather than your heart, playing into foolhardy assumptions by others to benefit your own portfoilio. One of the seven gems in the post says “stocks tend to under-react to both good news and bad news:”

This is because people like to sell at a profit, so they sell stocks on good news when they should keep them, and not at a loss, so they keep stocks reporting bad news when they should sell them.

To profit: If you have to invest actively, then these trends are worth exploiting.

So, commenters, what stock-related maxims do you let your investments live by? Or do you just stick to index funds?

7 ways to profit from other people’s folly [Monevator]
(Photo: Great Beyond)