Many new investors make many mistakes. That is fine because its expected. However, they need to learn how to avoid making those mistakes twice. Below are some common mistakes investors make.

Listening to TV pundits
Many investors listen religiously to the people who come on CNBC and other channels and follow what they recommend to the word. Not only is this not learn to invest on your own, many of the people who come on TV are wrong. If you watch CNBC, you will notice that many of the people give conflicting view of the market. This can't be good advice.

Not using diversification
When investors see a hot sector, they think they should fill up their portfolio with stocks from that sector. Then the sector collapses and so does their portfolio's value. This happened many times during the tech boom and bust. The way to avoid this is to have stocks spread out among many sectors.

Being Greedy
Another way investors hurt themselves is by never taking profits. They hold a stock all the way up, thinking it will never fall, then watch come all the way back down. They way to avoid this is to take some profits after the stock has gone up a set amount, like 20%.

Buying Losers
People don't like to lose money. When a stock they own starts to fall, they like to buy more of it, thinking its just getting cheaper. Then, it doesn't go back up so they take a big loss. Many great investors set points where if a stock fell that much, like 10%, they would sell no matter what. 10% doesn't have to be the exact number, but investors should a amount where they should sell.

Buying Penny Stocks
Penny stocks are very tempting. Who wouldn't want to turn a .10 stock into a 5.00 stock. However, that rarely happens. These stocks are priced so low for a reason. There is a very low chance these companies will ever make it. Most will file for bankruptcy. The only way to protect against this is to avoid these stocks.

While these aren't the only mistakes made by investors, just avoiding these five will make anyone a better investor.

Learn more about this author, Tommy LaBar.
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