The common mistakes — and how to spot them in yourself

The problem is rarely the market

After several years of investing publicly, I am convinced that the list of ways private investors hurt themselves is short, stable, and almost entirely self-inflicted. The same seven mistakes, decade after decade. Each one feels reasonable from the inside — that is what makes them dangerous. So for each: the tell, and the countermeasure.

1. Performance chasing

Buying what just went up. Fund-flow data documents the result as the behaviour gap: the average investor in a fund reliably earns less than the fund itself, often by one to two percentage points a year, because money arrives after the good stretch and leaves after the bad one.

The tell: it never feels like chasing. It feels like finally acting on something proven. The countermeasure is automatic, scheduled investing — a standing monthly purchase that does not consult your enthusiasm.

2. Overtrading

Every trade is a fee plus two chances to be wrong: once on the sale, once on what you buy instead. The costs are visible; the doubled error surface is not.

The tell: activity feels like diligence, and a quiet month feels like negligence. The countermeasure is a written rule for what justifies a trade, set in advance. If a transaction does not meet a condition you wrote down calmly, it is entertainment, and entertainment has cheaper venues. For calibration: my own closed trades show a median holding period measured in years, not weeks — the quiet months are the strategy.

3. Confusing a good company with a good stock

A wonderful business bought at 50 times earnings can be a poor investment for a decade; a mediocre one bought cheaply enough can work fine. The price paid decides the return. The company's quality is only half the equation, and it is the half everyone already agrees on.

The tell: your notes describe the product and never mention the valuation. The countermeasure is refusing to buy anything before writing down what you are paying per krona of cash flow — and what return that price implies.

4. Averaging down without a thesis check

Adding to a falling position is sometimes exactly right and sometimes how small losses become large ones. The difference is whether your original thesis has been falsified. If the reasons you bought are intact and only the price fell, buying more is coherent; if the reasons broke, you are paying to avoid admitting a mistake.

The tell: you find yourself averaging down to improve the average price, not because the case improved. The countermeasure is writing falsifiers at purchase — the specific facts that would prove you wrong — and checking the list before adding a single share.

5. Mechanical rebalancing into laggards

Selling whatever rose to buy whatever fell sounds disciplined. Between asset classes, with a plan, it can be. Between individual stocks it systematically trims the businesses proving your thesis right to fund the ones proving it wrong.

The tell: "taking profits" and "it's cheap now" appear in the same sentence, with no reference to either business. The countermeasure is deciding what you rebalance — asset classes, not single names — and letting position sizes reflect how theses actually developed.

6. Portfolio peeking

On a daily view, a diversified equity portfolio is down almost half of all days; on a ten-year view, historically, almost never. Checking daily makes temporary losses feel permanent, and feelings that strong eventually cause action. The loss you see every morning starts to look like a fact needing a response.

The tell: you check the app without being able to say what decision the number could change. The countermeasure is structural, not willpower: a fixed review schedule — monthly or quarterly — and removing the app from wherever your thumb goes when bored.

7. Mistaking a bull market for skill

When everything rises, every decision looks vindicated, and the confidence earned in those years arrives exactly when it is most expensive — at the top, arguing for concentration and leverage. A rising market grades on a curve; the honest benchmark is what an index fund would have done with the same money.

The tell: your explanations of wins cite your judgement, your losses cite bad luck. The countermeasure is a decision journal — what you bought, why, and what would prove you wrong, dated. Reread after two years; mine is reliably humbling, which is the point.

The edge is subtraction

Notice what the countermeasures have in common: rules written in advance, automatic investing, falsifiers at purchase, a decision journal. None requires brilliance. All exist to move decisions from the moment of emotion to a moment of calm.

The market's long-run return is available to anyone with an index fund and patience. Most investors donate a slice of it back through the seven behaviours above. For a private investor, the durable edge is mostly subtraction — not finding what others cannot see, but declining to do what almost everyone does.