Chapter 14: Traps
The idea that the sharemarket is littered with landmines is greatly exaggerated, especially in protracted bear markets. The overall trend of the sharemarket is generally up, so if you embrace the key rules discussed in chapter 6 then you will see your portfolio swell in value over time. At the same time, it would be naive to believe that you can drive a car with a blindfold on. You must stay alert at all times, keep your nerve and exercise sound judgement. It does not mean you have to be the smartest guy in the room to navigate the sharemarket, but it does mean you have to exercise common sense.
With those overarching comments planted, let’s explore a variety of situations that should be handled with caution.