Picking stocks can be a very frustrating experience. I think different people have different psychological problems when it comes to investing. Some example are
1) Getting caught up in a bull market
When stock are going up you feel your getting left behind. If you don't buy now, you might not get the chance to buy at all.
This is a dangerous one. I have learned to look out for it. My first experience was gold as it started to accelerate to $700/oz. Naturally I rushed into this one and bought at the top and then panicked when it crashed and sold at the bottom. I only lost $100 or so but enough to learn a lesson. The lesson there was mostly to avoid speculation. Gold is always a speculation. I can value stock fairly well but commodies? I am going to leave that one to other people and concentrate on what I can do well. I don't think I will get too caught up in this in the future but will be on the outlook.
2) Indecision on when to buy
This is always hard. Do I buy now or wait for it to go down further. I need to develop some kind of method for making this decision. This can be stressful since you tend to go back and forth everyday depending on how you feel about the economy and which article/webpage you happen to have read last.
3) Which to choose from?
Usually I can boil things down to a few candidates. For example right now some candidates on my list are JNJ, Walmart, K-Swiss, Meritage Homes, Home Depot. All are clearly undervalued but by how much? There is also the timeliness issue. Even if K-Swiss is undervalued, it is going to go down in a hurry if we have a consumer pull back. So maybe I should wait on those kind of stocks and buy stocks like JNJ which I only expect to go up. Of course you can be dead wrong on the short term direction of the stocks. I could always just buy all of them. The problem there is that I don't want to have a portfolio of 50 stocks since I don't have the time to cover all of them. If I am going to start buying so many stocks I might as well just buy the Dow. I want to keep my portfolio focused but feel afraid of missing a good opportunity.
4) Fear in a falling market
I haven't really experienced this too much except (as mentioned) with gold. I think if you have enough confidence in your stocks, you can avoid this. The trick is knowing your companies and knowing how much they are worth. Only then can you be confident that the market is wrong and you are right.