Buffett Says Avoid These 4 Dumb Investing Mistakes (Do This Instead)

Warren Buffett wants you to know these mistakes that amount to one thing: don’t be so human. Then consider this stock instead.

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Warren Buffett is a name that’s become synonymous with great investment ideas. It’s clear why. The billionaire finance guru came from nothing and is now arguably one of the best investors of the last century. Yet when it comes to some of his investment ideas, they can be quite simple.

Today, I’m going to give you the top mistakes to avoid, especially as Canadians continue to trade in a volatile market. Let’s get right to it.

Buffett: Avoid these dumb mistakes

When it comes to investing, it really comes down to humans being way too human. We go with our gut. We make emotional decisions. Ultimately, we stay away from data, wondering if we’re in the wrong and everyone else is in the right.

Yet Warren Buffett, again and again, states to avoid these types of mistakes. First, he states often that investors need to push fear and greed aside to make smart investment choices. Don’t be fearful that your stock might fall if you’ve done the research and worked with an advisor. Trust your research and hold long term.

But it goes further than that as well. Investors might see a pessimistic market and sell or an optimistic one and buy. Instead, stick to the data that will help you identify opportunities. Speaking of opportunities, though, there is also the fear of missing out (FOMO) in the investment world. We all know the one person who purchased a top growth stock at $1. But there’s a reason these stick out; it’s because it’s pure luck and chance — unless you have insider information.

Finally, don’t fall for the trap of panic and euphoria. You see shares dropping and sell in a panic, worried it will drop further and you’ll miss the opportunity to get out. Yet there’s just as importantly the chance to buy in a euphoric position, with shares at all-time highs leading to more purchases instead of waiting on a dip.

Instead, stick to the data. These are companies, not humans, and should be treated as such. This is why now we’re going to look at a company that investors can look into further.

Bank on it

Perhaps one of the best opportunities during a downfall is through Canadian banking institutions. There hasn’t been a banking crisis since 1840, providing investors with a strong option to get in when shares drop and all but guarantee a recovery.

That’s the case with Canadian Imperial Bank of Commerce (TSX:CM) right now. CM stock has been around for decades, going through multiple recessions and coming out strong on the other side. This comes from provisions for loan losses, of which it continues to use even now.

Granted, it’s been a difficult few years with a volatile market on top of a pandemic. Even so, the bank will persevere, as it has recession after recession. And right now, CM stock is a steal, trading down 8% in the last year but still up 50% in the last decade.

Plus, CM stock offers a solid dividend yield of 6.14%, one of the highest of the banks right now. Finally, it trades at just 11.11 times earnings, which is lower than its peers at this point as well. While the stock may take longer to rebound than the other banks with its exposure to housing, it still has a long-term growth path ahead of it for investors to consider.

Bottom line

So, don’t be fearful of the financial institutions trading down; instead, get in on the action. These are great deals that offer superior dividends for investors these days. Buy now, and you could have a portfolio that even Warren Buffett would drool over.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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