Warren Buffett's Top Three Mistakes to Avoid

USA TODAY asked Warren Buffett to put on his personal finance hat and tick off the three biggest mistakes amateur investors make.  Here are Buffett's Top Three Mistakes to Avoid. 

1. Trying to time the market.  "People that think they can predict the short-term movement of the stock market—or listen to other people who talk about (timing the market)—they are making a big mistake," says Buffett.

2. Trying to mimic high-frequency traders.  Buying stock in a good business and hanging on for the long term, he says, is a better strategy than flipping stocks like a short-order cook flips pancakes.  "If they are trading actively, they are making a big mistake," he says.

3. Paying too much in fees and expenses.  There's no reason to pay an expensive management fee to invest in a mutual fund when super-low-cost index funds that mimic large indexes like the Standard & Poor's 500-stock index are available, he says.  "If they are incurring large expenses in connection with their investing," says Buffett, "they are making a big mistake."


Buffett is famous for buying stocks when they are cheap, buying solid businesses that make a lot of money today and will make a lot of money tomorrow, and hanging on to his investments for a long time to maximize profit.