Most people figure that if they can only avoid making mistakes with their investing, things will turn out fine. Yet sometimes, it's the mistakes you make that teach you the most, getting you outside of your comfort zone and stretching your limits to help improve your results.
Living in New England, I've heard a lot about the late Sen. Ted Kennedy's tireless dedication to his work. Some words from his son particularly struck home:
"He was a mountain climber, navigator, skipper, tactician, airplane pilot, rodeo rider, ski jumper, dog lover and all around adventurer. Our family vacations left us all injured and exhausted."
Imagine that -- vacations leaving you injured and exhausted. That hardly seems like the kind of vacation one should hope for, but maybe it is. It does, after all, reflect a vacation of activity, of adventure, of living.
It's the same with investing. If we're really investing for the long haul in solid stocks that we've carefully chosen, ones that we think will appreciate considerably for us over time, we're bound to be disappointed now and then. They won't all perform as expected. Some will leave us injured and exhausted.
Reduce your losses
Fortunately, we can learn and profit from our mistakes. One of the most common errors we make is investing in companies that we don't understand well enough, and ignoring some of the risks they face. Here are a few companies along with some of the risks they spell out in their 10-K reports.
Fortunately, it's not that hard to discover what we need to understand about a company. Most companies spell out their risks in great detail in their 10-K reports filed with the SEC. A little time spent reading a company's reports can be very enlightening -- and if you make use of the information, it can boost your portfolio, too.
And even if you goof up now and then, know that it's inevitable -- even the world's best investors get injured along the way. But if you don't try, you won't ever reap the benefits of investing.
Ever been scared to invest? Jim Royal has a home run stock idea that you've probably been too afraid to buy.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. First Solar is a Motley Fool Rule Breakers selection. NVIDIA is a Motley Fool Stock Advisor pick. Intel is a Motley Fool Inside Value selection. Try any of our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.