Great investors try to keep investing as simple as possible so that they focus on things that truly matter.
Rule Number 1: Don't invest in something you don't understand.
The quickest way to lose money is to invest in areas where you have no idea how the business functions or how they earn income. By not understanding the business you can not evaluate the risks and how to minimize them. You do not need to invest in everything you hear about so just skip the ideas that you don't understand.
Another classic mistake is thinking that "this time is different." And that brings me to the second tip...
Rule Number 2: "This time is different"
The history of the markets usually rhymes with similar scenarios that have happened in the past or will happen in the future. If you invest in bubble assets near the top of the euphoria phase such as Tulip Bulbs, or U.S. Housing Market in 2006, you should expect a lot of pain very soon. The smartest investors wait for the bust and buy up cheap assets near the bottom of people pessimism. (Investors go from thinking the asset will never fall in price again to the asset will never rise in price. The truth is always in between.)
When the next bubble hits unload some expensive assets and have cash available to buy them up cheap a few years later.
Rule Number 3: Don't fight the trend.
Do not try to time the market direction change whether shorting expensive assets such as Beyond Meat or trying to catch the falling knife like JC Penny. The best investors are patient and wait for the market to form a new trend before betting in one direction or the other (buy an asset which is starting an uptrend or sell an asset which is in a new downtrend).
These are simple rules to live by where you will make less costly investing mistakes in the future. Enjoy your weekend!
Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.