Posted on September 20, 2009 by Nayab Naseer

Many investors make the mistake of coming under the influence of emotions or the brand value associated with the stocks, or they become emotionally attached to the stocks they hold. Some come under the sway of the popularity of the company name or the company’s marketing blitz. All these are cardinal mistakes an investor should avoid.

The aim of the investor is to secure maximum returns on the investment, and for this the investor should be solely guided on the growth prospect s, profitability and earning potentials of the shares, and the reputation, brand name and visibility of the company should be considered only in terms of how such aspects would help the share prices rise.

The investor should also identify when a share’s earning potential has reached its maximum and be ready to sell the shares when they are due, without being restrained from selling due to emotional considerations. Similarly, they should realize when the share no longer has any earning potential and should not block the capital due to emotional consideration, hoping without any basis that the share value would increase again.