I found an article written by Lauren Kamm of Kruse Asset Management that I wanted to comment on. The title of her article is, “5 Mistakes Investors Should Avoid During Financial Crisis.’

The five mistakes she cites seem like common sense to the experienced investor but for the beginner, these are good tips.

•        1. Don’t panic
•        2. Don’t be in a hurry to sell
•        3. Don’t be afraid to buy
•        4. Don’t listen to media hype
•        5. Don’t become emotionally invested in a potential investment

If you are a beginning investor, go to the link where I found the article and read in detail about each of the above five points. http://finance.boston.com/boston?ChannelID=3191&GUID=6700990&Page=MediaViewer

If you are an experienced investor however, I’d love to hear from you!  I myself am by no means an experienced investor but I don’t consider myself to be a beginner either. My two cents on this subject is related to some other common traps that investors fall into during similar crisis. 

One trap is related to investments that serve as solutions to current problems or as quick fixes. One example of this is all of the newly formed investment groups that are raising funds either through a PPM or another vehicle to purchase REOs or pre-foreclosures. These groups will pitch to potential investors that they are taking advantage of the opportunity that has arisen from all of the foreclosed homes on the market.  Do your due diligence on the members of these groups and verify their track records. How long have they been doing this? If they are a newly formed investment group, run!!

Another example is for the loan seekers who just can’t get credit during the current crunch and need a loan desperately.  Be wary of all of the ‘hard money’ lenders that are offering private money from outside investors.  A lot of these entities have just popped up overnight to take advantage of the credit crunch and they too have no track record. If you do need to go after private money, make sure the company has been in business for awhile and also, compare your options. Just because you are desperate doesn’t mean you need to be taken for a ride.

If any other experienced investors would like to add their own two cents on common traps that investors should avoid during the current crisis, I would love to hear from you!!