Not A Stock Wizard? Avoid These Investing Mistakes, Part 7

Read about the common mistakes people make when dealing with stocks.

January 4, 2001

Ain't nothin' like the real thing. Face it: 20 percent average annual returns are not an inalienable right. The past several years have proved to be remarkable, but that doesn't mean the bull will run forever. It also doesn't necessarily mean the market will crash and return to the 6,000 point level. To paraphrase Rudyard Kipling, "He who keeps his head keeps his sanity (and his wallet)." Babe Ruth had one of the finest batting averages in history, and even he struck out sometimes. So if you expect your portfolio to swing for the fences every year, you'll probably end up disappointed.

Know where your advice is coming from. What kind of license does your financial advisor hold? Has your registered representative received a bevy of customer complaints? If possible, speak with him or her in person or over the phone and get a feel for his or her style. Make sure your advisor understands your objectives, and be honest about your goals and expectations. To verify a potential advisor's experience, call the National Association of Securities Dealers Inc. at (800) 289-9999. If you're considering a certified financial planner, call the CFP Board of Standards Inc. at (888) CFP-MARK.

See our tips on Tuesday, December 26 through Wednesday, January 3 for parts 1 through 6 of this article.