6 Investing Mistakes that Will Lose You Money in the Stock Market Quickly

Investing in the stock market is not a simple endeavor. Successful investing techniques include performing analysis and thoroughly researching the fundamentals of the market. Losing money takes very little effort on your part. A couple of speculative investments can quickly lead to exorbitant losses. Avoid making the same following mistakes that other investors make:

The high payoffs for investing in some initial public offerings have led many investors to chase tech IPOs. For example, a number of investors reaped great financial rewards when they purchased shares of LinkedIn

. The stock shot up by more than 80% in one day, and savvy investors made a hefty profit. On the other hand, investors hoped the Pandora

IPO would also result in the same kind of payoff, but the results were very different. The stock was trading at $25 a share on the first day of the IPO, but by the end of the day shares closed at $17.42 and the stock has continued to drop. Many people who invest in initial public offerings lose their investment capital, due to the uncertainty around IPOs. You can't predict exactly how an IPO will behave; the pricing action is volatile, and analysts are fickle. Low price targets set by analysts and uncertainty about a company's profitability and strategies can cause an IPO stock to plunge. Buying IPO stock without conducting supplemental research on the company is a quick way to lose money in the stock market.

Investors sometimes try to bottom feed, buying shares of once-great franchises after their stocks have plummeted. For instance, investors purchased shares of Kodak, Blockbuster, and Rite Aid when prices dropped, hoping the stocks would rise again. The stocks kept dropping, and these companies have become investment money pits. The companies never truly rebounded; they have either declared bankruptcy, or are on the verge of insolvency. Sometimes it is best to sit on the sidelines waiting for a stock to settle, instead of buying shares when the stock keeps dropping. Do your due diligence before investing in one of these companies!

Growth is so attractive to some investors that they will buy shares of a company, regardless of its earnings. However, profitability typically impacts investments more than growth. There are companies that grow their revenues year after year, but have failed to ever turn a profit. Investments need to be made in companies that actually make money in order to be lucrative. It is important to understand a company's earnings power, and its business model, before investing in the company. Some companies seem like a great opportunity for investment, until you take a closer look at their financial statements. It is difficult to value a company that has negative earnings. In this scenario, investors have to examine other information about the company's financial picture, including revenue growth, and whether the situation is temporary, or indicative of a pattern.

There are a variety of

associated with investing in the stock market. If you don't keep a close watch on transaction and trading fees, your profits can quickly disappear. Carefully review all costs for commissions, service fees, and fees associated with trading. For small investments, the cost of trade commissions can quickly eat up any potential financial gains. Monitor expenses closely, to make sure you're really making a profit, and utilize discount brokers like

and

whenever possible.

First-time investors often overlook learning opportunities. Read everything you can about investing. There are untold resources online and at the library geared towards first-time investors. Joining an investment club, and becoming actively involved in that club, provides opportunities to learn more about investing. The club pools its money and invests in various stocks, then reports on the stocks, and their progress, during meetings. Members can learn how to read stock charts, how to analyze companies' profitability, and how various investment options, like dividend reinvestment plans, work. Lastly, if you make an investment mistake, don't simply move on. Take the time to examine your errors and learn from those mistakes.

Emotional investing, when investors become overly confident, unduly agitated, or generally too attached to their investments, is not uncommon. When you invest in the stock market, you have to suffer through many highs and lows. You have to be able to buy a stock without knowing exactly how the stock will perform. You also have to know when it's time to sell a stock, and to do so without regret. Portfolio

, investing in different types of stocks and various types of investment vehicles, can help you to avoid emotional investing. All too often, the emotional involvement comes from focusing on one particular stock. Having a diverse portfolio decreases the reliance on the stock and helps emotional investors understand that all investments ebb and flow, based on a variety of reasons.

Investing in the stock market might seem like a good idea, because it is often viewed as an easy way to make money. There are even television shows like

that glamorize investing in stocks. Investors need to understand some basics about the market, and have some capital to invest, before diving in. Savvy investors know that it takes time, energy, and patience to learn how to invest profitably. Avoiding common investment mistakes improves your chances of making money in the stock market. Do you have experience investing in IPOs? Or have you invested in a company with negative earnings?