Reading the Financial Pages for Dummies®

Chapter 9. Watching Out for the Pitfalls

In This Chapter

• Avoiding heart-stopping frights

• Locating those pesky debts

• Understanding the shorting trap, and where it leads

Nothing gets the heart racing like a good fright, and the stock market can deliver one in spades if you're a beginner. Not everything this chapter describes is necessarily bad news, though – just some peculiar bits of behaviour that may make you stir a bit now and then.

This chapter helps you get wise to some of the market's wiles. I can't send you out into the investment jungle without alerting you to at least a few of the beasties that lurk in the undergrowth.

Avoiding Common Mistakes

Don't get me wrong, I'm not trying to say that everyone's out to get you when you venture out, as a mere privateer, into the world inhabited by hoary old professional hands. Indeed, all the evidence seems to show that if you're any good, you can beat the professionals at their own game without too much difficulty.

Look at things this way. When a big investor controlling lots of money makes a move, the whole jungle crashes with the reverberations of what he's done, and everybody knows he's done it. But when you make a move nobody's any the wiser. That's because you're likely to be dealing in a thousand pounds or two, not a million or two.

Obviously, an error involving a thousand or two hurts you just as much as the man with a billion in his portfolio – proportionally speaking, of course. But a little time spent looking at some of those mistakes ...