However careful you are, you can always make a mistake in the stock market. And be stuck with a wrong stock. Most of us don't think buying the wrong stock is a mistake – we bank on concepts like “averaging out” and the false hope that the stock will eventually perform. We don’t realise that underperformance of capital is one of the biggest mistakes we can make in the market. So, as an investor, remember two cardinal rules: One, be bullish, but selective. And two, focus on managing risks – not only in terms of buying the right stocks, but also not selling them in a hurry. The only way not to get stuck with a wrong stock is to do your homework. Know the business you will own when you buy the stock.
