Mistake 7 of 9
Following tips instead of plans
The mistake
A WhatsApp group, an influencer, a cousin with a "sure thing". If you cannot explain why you own something and when you would sell it, you don't own an investment — you own a rumor.
The fix
Before buying anything on a tip, write one sentence explaining why you're buying it and one sentence for what would make you sell. If you can't fill in both blanks, it isn't ready to be a real position yet.
A concrete example
Two people buy the same stock after a tip: one bought it because a group chat said "it's about to explode," the other because they researched the company's fundamentals and have a specific price and timeline in mind. When the price drops 20%, only the second person can tell whether that changes anything.
Frequently asked questions
What if the tip comes from someone who genuinely knows the market?
Even a good source is a starting point for your own research, not a substitute for it — you still need to understand what you own well enough to make your own decision when conditions change.
Are these mistakes different for startup investing?
Yes — following a hyped tip into a startup is especially dangerous because there's no daily price or liquid market to correct course; you're locked in for years with the decision you made on a rumor.