The 5 decision errors destroying your investments

The common narrative says financial losses result from unpredictable markets, unforeseen events, unfortunate circumstances. In reality, most losses follow predictable decision patterns that repeat with impressive regularity.

Error 1: Investing without delimitation

The most common and costly error: not defining in advance what you can't afford to lose. "I invest what I can" isn't a strategy — it's an absence of strategy. Financial delimitation means knowing, before investing, what maximum loss you can bear without your life changing in an unacceptable way.

Error 2: Confusing returns with real gains

An investment that "returns 15%" seems attractive. But if getting it requires locking up capital for 5 years, paying 3% fees, and facing volatility that keeps you up at night, the real gain — net of financial costs, emotional costs, and missed opportunities — might be negative.

Error 3: Averaging down without margin

"The price dropped, I'll buy more to lower my average." This logic only works if you're right about the direction and have unlimited margin. If you're wrong, you're doubling a loss. DAMM's Margin asks: if it drops another 30%, can you handle it?

Error 4: Following the crowd during euphoria

When everyone's buying, prices are already high. When everyone's selling, prices are already low. Social comparison — "everyone's investing in X" — produces decisions that systematically arrive late. The asymmetry at those moments is brutal: the residual gain is small, the potential loss is enormous.

Error 5: Not testing with the minimum move

Investing all available capital in a single direction, at a single moment, is the opposite of the Minimum Move. The principle is simple: invest the minimum necessary to validate the thesis, observe the result, then decide whether to increase exposure.

The DAMM sequence applied to investments

1. **Delimitation**: how much can you afford to lose without your life changing?
2. **Asymmetry**: does the expected return justify the real risk (not the stated one)?
3. **Margin**: do you have enough reserves to withstand a negative scenario?
4. **Minimum Move**: can you start with a small position and increase gradually?

If the answer to any of these questions is "no", the decision needs rethinking.