The Biggest Investment Mistake to Avoid in 2026
January 19, 2026
Over the years, markets have rewarded those who bought every dip.
Fast rebounds happening after every sharp correction reinforced the belief that declines are temporary, boosting investors’ confidence in buying the dip.
However, market behaviour changes across cycles, and what worked previously might not work now.
In 2026, the biggest risk in investing may be assuming that stock prices will always keep rising or rebound immediately after corrections.
Let’s break down why and what you can do to avoid this mistake.
Investors now expect fast recoveries after dips, having seen this pattern often enough in recent years.
For example, Singapore Technologies Engineering (SGX: S63, STE) share prices dropped approximately 15% from S$8.96 on 13 August 2025 to S$7.61 on 1 September 2025.
However, it bounced back and reached S$9.01 per share by 7 October 2025.
For investors who bought during the dip, they would have made about 18% just by holding the share for a little more than a month.
Such instances are why temporary pullbacks are being taken as “cues” for opportunities to buy in.
However, this mindset encourages complacency and excessive risk-taking.
Investors might skip the required analysis, assume that the business fundamentals are no longer important, or take on positions that are larger than what they can comfortably hold.
Share price rebounds are typically governed by specific conditions, such as the easing of policies and reports of strong earnings.
There is no guarantee that the same conditions will repeat for the share that had dipped.
It is important to remember that while markets do recover over time, it is not always a quick rebound.
The stock market in 2026 looks very different from the previous years.
Interest rates are no longer rising aggressively.
After several strong years, earnings expectations are higher, and valuations in many sectors leave less room for disappointment.
In a late-cycle market, corrections are choppier and more selective.
Growth remains positive but is slower, giving subdued returns.
Some stocks might recover quickly, but others could continue to decline as fundamentals catch up with prices.
Take for example, Genting Singapore Limited (SGX: G13), which was trading at a high of S$1.06 on 19 February 2024.
Despite strong market rallies in 2025, the stock price dipped and the company is currently trading at S$0.73 per share, down approximately 31%.
Investors who expect fast recoveries like in previous years may grow impatient, leading them to sell even when prices are low.
The environment that supported fast rebounds may be fading, and it is important to acknowledge this.
When recoveries take longer than expected, patience disappears.
Investors start to second-guess their decisions, reacting emotionally to daily price movements.
They make decisions based on fear as they get stressed out by drawdowns that last months instead of weeks.
Those who invested without sufficient understanding of the companies they bought into are the most affected by this, suffering losses when they sell prematurely.
Additionally, positions can easily become oversized relative to risk tolerance simply because prices “look cheaper” than before.
Unrealistic expectations can amplify emotional strain.
For these investors, the longer markets stay down, the harder it becomes to stay disciplined in investing.
Instead of rushing to buy every dip, understand the business and its fundamentals first.
Check if the company’s balance sheet is strong, its free cash flow resilience, debt status, and the sustainability of its revenue stream.
For example, Singapore’s largest bank, DBS Group Holdings (SGX: D05), demonstrated consistent, robust earnings and has strong capital and liquidity positions.
The bank also has a history of maintaining dividends even amid easing cycles.
Analyse the company’s valuation relative to its long-term earnings and do not base your decision on short-term price movements.
Rather than assuming every dip is an opportunity, investors should ask themselves:
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Do I understand how this company makes money?
Are you comfortable with the specific risks of the industry this company operates in?
Familiar names like Singapore Exchange Ltd (SGX: S68) and Singtel (SGX: Z74) can be good places to start.
If you cannot explain how the company generates profits, it is hard to judge whether the price drop is an opportunity or a warning
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Has the business model fundamentally changed?
Not all price drops are the same.
Some are driven by market sentiment, while others are caused by real issues such as declining demand and regulatory shifts.
If the fundamentals have deteriorated, buying the dip means buying into a long-term problem.
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Can I hold this investment if this recovery takes longer than expected?
Markets do not always bounce back quickly.
If you are only comfortable holding the stock for a short period of time, you may panic sell during extended downturns, suffering losses in the end.
Market corrections are not the same in 2026.
The biggest investment mistake to avoid is assuming that markets will always bounce back quickly.
There might be fewer but longer-lasting corrections that will test one’s capability of holding stocks longer than expected.
Disciplined investors will focus less on short-term price movements and more on durable companies that can ride out a downturn.
Investing ultimately rewards patience and time in the market, not instant recovery.
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Disclosure: Wenting does not own any of the stocks mentioned.
The post The Biggest Investment Mistake to Avoid in 2026 appeared first on The Smart Investor.
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