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The Investment Decision Making Process Phases an investor goes through, their mistakes and reasoning

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Posted 07 December 2009 - 07:23 PM

The Investment Decision Making Process is an important step that every investor needs to take before investing in an asset. Some questions that should be involved in this step are:

  • How should an investor make decision? What should the decisions be based on?
  • How much should an investor buy/sell of the underlied asset?
  • When should the buying/selling decisions be made?
  • Are these investments suitable for the specific investor? Is the investor risk-averse, or risk-loving?
  • ...

Below is a graph, including comments, created by Alan R. Shaw, of a typical investing phase that an investor goes through as the value of the investment changes:

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