The first thing every investor learns is not to put all his eggs in one basket, which means diversify your portfolio with a blend of securities or, in the case of a stock portfolio, a larger number of stocks. Diversification makes sense as long as you understand that over-diversification is as bad as under-diversification.

The main purpose of diversification is to protect you from losing money due to the risk involved in the stock market.

Only a few of us are born with investing qualities. Even the greatest investor of all times, Warren Buffet, made a number of mistakes before getting on the right track. The difference between a successful investor and an unsuccessful one is the ability to learn and avoid the mistakes other people have made.

It's no secret that many investors focus obsessively on one investment that's losing money, even if the rest of their portfolio is in the black.