Five psychological mistakes that cost Vietnamese investors money
Ask any investor who has lost money in Vietnam's stock market and they will tell you about the wrong ticker, an unexpected macro headline, or an unpredictable cycle.
They rarely mention what actually caused the loss: themselves.
A decade of behavioural finance research keeps producing the same finding: the average investor does not lose for lack of information. They lose because emotion drives the decision. In Vietnam's market, where information is chaotic, hype cycles are short, and crowds spread fast, these traps are far more dangerous.
Here are the five most common psychological mistakes, and how a disciplined investor avoids them.
Mistake 1: FOMO, chasing out of fear of missing out
FOMO, the fear of missing out, is the most common psychological mechanism in any market, and especially strong in Vietnam where investing groups relay news in real time.
How it looks: you see a stock up 30% in a week. The group chat is buzzing. Everyone is posting gains. You feel you are standing on the platform watching the train pull out, and you jump on.
Why it is dangerous: when you buy after a sharp rise, the margin of safety is essentially gone. You are not buying value; you are buying the crowd's excitement. And crowds tend to be most excited at the top.
"The market is driven by two emotions: fear and greed. The intelligent investor is the one who can tell when emotion is overwhelming analysis." — Benjamin Graham
How to avoid it: before buying any stock, ask: "if nobody had told me about this stock today, would I have found it and bought it myself?" If the answer is no, that is FOMO, not investing. See also why patience while prices rise is a rare skill.
Mistake 2: loss aversion, refusing to admit you were wrong
Kahneman and Tversky, the psychologists who won the Nobel in economics, showed that the pain of losing a million dong is roughly twice the pleasure of making one. That is an evolutionary feature of human beings, and a disaster in investing.
How it looks: you buy a stock at 100. It falls to 70. You do not sell because "the loss is not realised yet". You hold. It falls to 40. You still hold, sinking further into the illusion that you must "wait to get back to even".
Why it is dangerous: loss aversion makes you hold losers too long and sell winners too early. The result: you keep cutting the tops short and stretching the bottoms out. That is a reliable formula for losing.
How to avoid it: separate two situations clearly:
- Holding because the thesis is still intact: reasonable. That is patience with a basis.
- Holding because you do not want to admit you were wrong: dangerous. That is ego protecting itself, not analysis.
Every month, ask of each losing position: "if I did not already own this stock today, would I buy it?" If the answer is no, you know what to do.
Mistake 3: confirmation bias, reading only what you want to believe
Once you have bought a stock, your brain starts filtering automatically: positive analysis gets read carefully, risk warnings get skipped. This is confirmation bias, the tendency to seek out information that confirms what you already believe.
How it looks: you invest in a business. Results start to deteriorate. But you only read the comments from people who agree with you and skip the concerns from the other side. You reassure yourself that "those people do not understand this business".
Why it is dangerous: you are building an echo chamber around your decision. Early warning signs stay hidden until it is too late.
How to avoid it: build the habit of collecting disconfirming evidence, actively looking for reasons you might be wrong. This is what Charlie Munger called "invert, always invert": reverse your own thesis and test it.
Before any final decision, find at least two main reasons this could fail. If you cannot find them, you have not analysed deeply enough.
Mistake 4: overconfidence, a few wins and you think you are good
In a bull market almost everyone wins. The problem is that many people mistake winning because they are good for winning because the market is going up.
How it looks: after three or four successful trades in a row, you start increasing position sizes, cutting analysis time, and taking riskier trades on the basis that "I know what I am doing". This is the most dangerous phase in any investor's life.
Why it is dangerous: overconfidence makes you drop the discipline: no margin-of-safety check, no mental stop, no proper diversification. One mistake at this point can erase years of accumulation.
"The stock market is a device for transferring money from the impatient to the patient." — Warren Buffett
How to avoid it: keep an investment journal: the reason for buying, your estimate of objective value, and the price at which you will sell. After each trade, win or lose, reread the entry and ask: "was I right, or was I lucky?" That distinction is the foundation of a grown-up investor.
Mistake 5: herd mentality, following the crowd because it feels safe
Humans are wired to follow the crowd. In prehistory, walking the other way could mean walking toward the lion. In investing, that instinct is one of the largest causes of loss.
How it looks: you buy a ticker not because you understand it, but because "everyone is buying". You sell not because the thesis changed, but because "everyone is panicking".
Why it is dangerous: the crowd guarantees you will be average, not that you will profit. Market history is consistent: those who buy while the crowd is frightened and sell while it is euphoric do far better. But it is extremely hard to do, because it requires disciplined loneliness.
How to avoid it: build your own investment checklist, a set of specific questions you must be able to answer before any decision. If your answer to any of them is "because everyone is doing it", stop. See also how to stay calm when the market panics to build the skill.
The common denominator: these are system problems, not information problems
Notice something: none of these five mistakes happens because you lacked information. They happen because you lacked a decision system.
A value investor differs from an ordinary investor not by knowing more, but by having a consistent process that keeps emotion out of decisions:
- Analyse before the market moves, not react while it is moving
- Establish intrinsic value independently of market price, and only buy with a wide enough margin of safety
- Write it down and review it, to learn from both right and wrong decisions
- Separate investing money from living money, so financial pressure does not bleed into decisions
In closing: the market does not take your money, your psychology does
Most Vietnamese investors do not lose because the market is unpredictable. They lose because they buy in euphoria and sell in panic, over and over, in every cycle.
These mistakes do not disappear by reading more analyst reports. They fade as you build a disciplined decision system, a process you follow even when emotion says otherwise.
That is what "silent discipline" actually means. Not passivity, but being solid enough not to get swept into the storm the market produces every day.
Silent discipline. Compound value.