Timing the market – Although the financial markets can be remarkably steady over longer time periods, sharp short-term movements in security prices are increasingly frequent. Choosing the ideal moment to buy or sell is difficult, and investors who attempt to time the market may end up missing periods of exceptional returns.
Ignoring the power of diversification – Individual asset classes go in and out of favor over time. Harnessing proper diversification can enhance returns and help to cushion against volatility.
Assuming past performance guarantees future results – That’s why you see “Past performance does not guarantee future results” on every investment marketing piece that mentions performance—because it’s true. You may end up selling when you should be buying, and vice versa.