1. Lack of financial literacy – One of the major reason why people lose money investing in stock market is because lack of financial education. In order to invest in stock market, one must understand and know how to read financial statements of the company that you are investing in. Three financial statements that we need to understand when come to analyzing a company’s financial position: balance sheet, income statement and cash flow statement. Besides it is very important to understand stock and financial jargons before we can even start looking at stock market. Take one example: Stock ABC and DEF are both selling at $5 and $50 respectively. Which stock is more expensive? A person without any financial knowledge will think $50 is more expensive because the amount is larger. However a person with financial education would understand it takes the underlying company asset and financial prospect to evaluation the true value of the stock. In our example let say ABC cost $5 where by it should have worth $1, and DEF cost $50, where by it is really worth $100. Now which one is more expensive? Obviously stock ABC is 400% more expensive than it should be.
2. Follow other people’s idea – Many people without financial education of stock will turn to other sources such stock analysis column in newspaper. Stock analysis is a good reference material for beginner stock investors but it shouldn’t be treated as investment decision. The reason why people can’t make money from buying stock analysis idea is because most analysis reports simply come out too late, before the analysis report being published, professional investors has already gone in and wait to make the killing. Small investors who buy into the stock idea will later go in and immediately get killed by well-informed investors.  
3. Buying Hot Tips – A lot of time in stock investing arena we heard about so called hot tips from insiders. No people know exactly how true is the tips until proven otherwise. This is when people make a lot of losses by plunging into the stock. Thing is, most of the hot tips is spread from insider just so to push up the stock price so some one also from “inside” can make a profit. This kind of rise is not sustainable in long term, and it will retrace as soon as the news died down or some one has made a handsome profit by selling off the stock.
4. Emotional Investor – Admittedly when comes to investing our own money, there is a part in us will always react irrationally, this is our emotion. The fear of losing money. The greed when seeing other investors making money. For those who fears, it usually happens when the person have previously experienced heavy loss from stock investing. The painful experience of losing money will cause him to back away from buying opportunities even though it is good time to buy. Fear will cause investors to stand at the side line, wait and see, and these investors will wait and see as long as they are afraid, but it is only when their fear overwhelmed by greed then they went into the market. They eventually get slaughtered because it is too late when they go in. Wait until fear overcame by greed is too late. There is one saying by the world wealthiest stock investor Warren Buffet: When everyone is afraid, you should be greedy. But when everyone is greedy, you should be very afraid.
5. Sell Too Early and Sell Too Late – The first one will not earn you much money, and second one will lose you lots of money. Many people invest in stock without a clear set of exit strategies, strategies define when to sell to lock in to profit and when to sell to cut loss. Many people will sell their stock way too early and then witness the stock price skyrockets afterward. Even more people will hold on tight to the stock as long as the stock is going down, then sell only before it hits zero. Actually, these behaviors can also be attributed from lack of financial intelligence, the skill required to determine the stock intrinsic value thus developing the exit strategy.
6. Timing the Market - Some investors believe in prediction, they believe there are signs to look out for the next big stock  market movement but many times they are wrong. They make huge loss from believing the so called prophecy. The thing is, stock market is consist of hundreds of millions of institutional, professional and individual investors who act and behave differently that contributed to the erratic and irrational stock movements over time. No one in their limited humanly mind can precisely predict what is going on next.
7. Over Diversified – Certain level of diversification is good thing, as it could reduce losses when you are wrong but at the same time it also limit the profit when you are right. Over diversified will most probably kill you. Imagine having to keep track of 10 to 20 stocks per day. Besides, there is a thing call minimum brokerage fee that you need to pay for every stock trade. Since the proportion of each stock investment is small, minimum brokerage fee incurred will drown your potential return so much even before you make profit and try imagining most of the stocks remain status quo. As our greatest stock investor Warren Buffet says diversification is for birds. One diversifies only when he doesn’t know what he is doing.

Further topics related to stock investing:

1. Where To Learn Financial Literacy
2. What Warren Buffet Sees In His Companies
3. 7 Ways To Pick Quality Stocks
4. How You Can Make Money In Market Downturn

Average dollar per customer - Average dollar per customer is the average amount of money one customer spends in a transaction of purchase. For a store to be more profitable, one of the sales variables they need to improve is the average dollar per customer. There are many strategies to increase this figure. Below are some of the examples:

1. Buy two get one free.
2. Buy one get another with 30% discount.
3. Arrange a series of related products together that are interrelated and make them seems like interdependent.
4. Placement of product in the right place.
5. Use of wording 1: Clearance sales.
6. Use of wording 2. Early bird package, first come first served, first 100 customers discount, etc.

 Giving out great discount – For the first two strategies, it seems the seller is giving out great deal by giving great discount but actually they entice you to buy a few similar products that you probably don’t need. Let say buy one and get the second with 30% discount, if they get 40% profit margin when you buy an item, then they get you to buy 2. The combine margin becomes 50% with 25% margin per item (25% = 40% – 30% discount divided by 2). Even though their margin per item is lowered, but their combined profit margin increased by 20% (from 40 to 50%) which also increase the average dollar spent per customer. A very good example is McDonald, the price of a burger is very low, but in the process of ordering, a well trained staff will usually get you to buy the combo meal, have an upgrade to the size, get a sundae for dessert and spend a little bit more to get the super cute toy. That explains when you only want a $3 burger for lunch instead you came out from the restaurant spending $20. That’s a whopping 600% increase in average dollar spent per customer. By attracting 100 customers to do the same, how much profit you as consumer help them to make?

Strategic placement of products - For the third and forth strategy, it is usually employed in retail store or shopping complexes, for example in branded clothing boutique and grocery store. Have you ever wondered why all the stuff you need are all conveniently arrange near to each other? For example, when you buy a pair of jeans, there are racks displaying belts that go well with the jeans. When you buy a working shirt, there are cufflink, tie, and slack being placed adjacent to each other. This is because shopper who buys a pair of jeans usually needs a new belt to go together and buyer who buys a working shirt will likely to get a tie or a new cufflink. By putting near each other, it is very convenient for the shopper to grab it and it is also reminder for the shopper to buy more, thus increasing average dollar per customer.

Have you ever noticed some shop that is on sale usually don’t display the items on sales at store front, instead they place those items at the end/back of the shop. This is no coincidence or by random, in fact this is cleverly designed by marketing expert. First of all, a store that is on sale will attract lots of attention; it lures customers into the store that is the first step. Many people will go into the store even they never planned to until they see the sales banner. Usually the non sales items will be placed at the store front. The common behavior of shopper is that they spontaneously have a look at those non-sales items before they walk to the sales section. By the time they are there, they probably have a lot more to pay for.

Emotion trigger – Human spends when reacted to certain emotions; excitement, fear and greed. The clever use of wording can trigger the emotion in human. How do you feel when you see the word “clearance sales” or “stock clearance”? If the store on sale is your favorite clothing brand, you are likely to feel excited and deep down, emotion of greed. How many stores do you think that put on this banner are really selling the stock in cost price? The answer is, not a single one of them. Do you think cost in operating a store is free? Of course not. Or have you noticed is there any difference between clearance sales and normal sales? You might be surprise that some claimed clearance sales are selling at the same or higher price than normal sales. That’s why, even though it is a ”clearance sales”, they can still make a good margin of profit from you, and because of clever use of word, more customers will flock into the store, thus more potential buyers.

Emotional Urgency – Another clever strategy employed is to create a sense of emotional urgency in consumers, the emotion that combines greed and fear. I’m sure you come across advertisement with words like; early bird package or first 100 customers discount. The advertisement might tell you it is a great deal and there is only little stock left before it lasts. Well, some are true but many of them are not. The aims of designing such words are to set an emotional urgency in human mind. People who hear or see this will usually commit to buying mode in rush for fear the deal will end, even though they might not need it (greed). The worse thing is; it might not be that great of a deal as it claims after reconsider.

In my early article I wrote about emotional resiliency in spending control.  In order to further boosting emotional resiliency it is also very important to understand the sales and marketing strategies being used on you, so you can use it to protect against it. There is a Chinese proverb sounds like this:

In order to understand yourself you need to understand what you are up  against.