Here are four common mistakes investors make when buying (or selling) stocks. By avoiding them, you stand a better chance of improving your returns — and cutting risk — in your stock portfolio:

1. Failing to take a broad view: When making investment decisions, it pays to take a wide range of relevant facts — positive and negative — into account. Unfortunately, it’s all too easy to zero in on a scrap of information that reinforces your wildest trading impulses or deepest economic fears.

It’s particularly risky if the scrap of information appears in a newspaper headline, especially on the front page. If enough investors buy or sell in response to a shared impulse or fear, it can have a big but temporary impact on the stock.

2. Investing based on a theme: When you indulge in theme investing, you allow a theme or concept to take a central place when deciding what to add to your stock portfolio. Usually the theme or concept includes some prediction about the future that has some truth in it, and will make noticeable changes in society. You may assume that if you can just get aboard that theme or add an investment whose future is tied up with it to your stock portfolio, you are bound to make money.

Theme investing can pay off when luck is running your way, and most popular investment themes are supported by facts. But if the theme is your overriding consideration, it’s easy to get sloppy about the details and overlook risk.

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3. Adding new issues to your stock portfolio: It pays to keep new issues out of your stock portfolio. Most come to market when it’s a good time for the company and its insiders to sell. This may not be, and often isn’t, a good time for you to buy.

New stock issues start out with a big marketing push by the firm that sponsors them. When the initial hoopla ends, hidden risks can emerge. This can spur deep price declines in the new issue that go on for years.

Our rule is to avoid adding new issues to your stock portfolio until they’ve survived at least one recession. By then, hidden risk has often come out in the open.

4. Succumbing to the lure of structured investments: Financial institutions create these often-complicated investments because they think they’ll be easy to sell to investors.

Structured investments often focus on reducing risk. That’s a huge selling point. But it costs money, which comes out of investors’ pockets. Structured investments can spend so much money cutting risk that they produce scant returns or even losses after five or even 10 years.

Recent examples of structured investments include the asset-backed commercial paper market (which recently collapsed), and index-linked GICs.

If you’d like me to personally apply my time-tested approach to your investments, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.