Successful investing is less about finding big winners and more about avoiding big losses.

A Broader View of Risk:

• Concentration Risk: Are all your stocks in one industry? If something bad happens to that industry, your whole portfolio could suffer. Diversify by owning companies in 2-3 different sectors.
• Currency (FX) Risk: If a company needs to import materials, a weaker Naira can increase its costs and hurt its profits. Check the annual report for this.
• Inflation Risk: If inflation is 15% and your investments return 10%, you’ve lost 5% of your buying power. Your goal is always to make a real return that is higher than inflation.

Common Mistakes to Avoid:

• Confirmation Bias: Only looking for information that agrees with your decision to buy a stock. Actively seek out the “bear case” or reasons not to buy. It will make your final decision much stronger.
• Analysis Paralysis: You will never have perfect information. Do your homework, build a solid plan, and then take a small, measured step. You learn best by doing.

Selling Winners & Holding Losers: A common psychological trap is to sell winning stocks too soon to lock in a small profit, while holding losing stocks for too long, hoping they’ll recover. A journal and pre-set exit rules help prevent this.