What do Nortel, Bombardier, Royal Group Technologies and Sun Microsystems have in common? They're all dogs that have lost me at least 20% over the years.

Adrian Mastracci, investment counsel at Vancouver’s
‘fee-only’ KCM Wealth Management, says, "The biggest problem is investors don't have a game plan. It's like building a house without a blueprint...”

Don't get me wrong. I love dogs -- when they're on my couch and not in my investment portfolio. Though I confess some of the stocks were my selection, others I can blame on my financial advisor.

When it comes to investing in equities, mistakes are inevitable. But being aware of the potential pitfalls can help you avoid getting bitten quite so often.

So, herewith, the pros offer up their list of top bone-headed investor moves:

1. BUILDING A DOG HOUSE WITHOUT A FOUNDATION

Adrian Mastracci, a fee-only investment counsel at KCM Wealth Management in Vancouver, says the biggest problem he sees is investors "don't have a game plan. It's like building a house without a blueprint... Investors spend too little time on the policies and strategies they ought to follow in order to reach their personal goals." They need to sit down with their financial advisor and set out the rules for how the relationship will work and what they want in their investments. Are you seeking income or capital gains? How much do you need for retirement? All of this impacts the type of investments you should hold.

Without a plan in place, he says, investors will find themselves caught up in the baying of market hounds and buying whatever is hot at that moment.

2. FORGETTING IT'S THE PACK, NOT THE POOCH, THAT MATTERS

Investors make the mistake of focussing "on individual securities instead of portfolios," says Eric Kirzner, the John H. Watson chair in value investing at the University of Toronto's Rotman School of Management.

Mr. Kirzner says when he speaks to retail investors he often hears about "how they lost 15% on this stock and 355% on that stock instead of focusing on ultimately what matters the most, which is how their [overall] portfolio is doing."

He says diversification across industry segments and investment styles is key to successful investing. "Some things are going to be up and some things are going to be down." So if all you do is flock to one type of investment, then prepare to be set upon by a pack of hounds.

3. FALLING IN LOVE WITH YOUR STOCKS

Don't get attached to investments, says Don Coffin, head of investment solutions at UBS in Toronto. While emotions are a good thing for relationships, they can be disastrous when it comes to picking stocks. "The darlings of yesterday are often the dogs of the present."

He says the key to investing is to objectively research stocks before committing and then stay on top of developments after buying them. Create a strategy not only for buying an investment, but also for selling. That will reduce the emotional element. If a stock is not meeting expectations, then dump it. Don't ride it down.

Mr. Coffin says the psychology of investing is such that "people are willing to take a larger and inappropriate risk to eliminate a loss." That only compounds a bad situation.

If your investments have performed well, then re-evaluate them and determine if they are still worth holding and don't be afraid to book profits. It's better to pay capital gains tax than claim a capital loss.

4. LOADING UP WITH LEVERAGE

Mr. Coffin says a common mistake investors make is "they borrow too much to buy on margin." According to the Investment Dealers Association of Canada, investors had $9.768-billion in margin debt at July 14, $1.2-billion more than a year earlier.

He says the margin problem arises when stocks begin to look so attractive an investor "borrows everything he can to buy as much as possible." If the market turns south, which they do at some point, leveraged investors suffer a big bite out of their capital.

5. IGNORING POTENTIALLY BETTER BREEDS

There are as many stock markets as there are breeds of dogs, so shop around and watch out for home-country bias, which Mr. Kirzner says is the natural inclination for investors to "over invest in their home country."

Canada's markets have performed well the past few years, and the prospects are good going forward, but now is the time to take some of those profits and reduce your risk by gaining exposure to other markets.

The problem, he says, is that Canada's markets are concentrated on financial services and natural resources, and investors miss out on opportunities to gain exposure to industries such as health care and consumer goods.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.