In our transition from an institutional money manager to an independent research provider for individuals, we’ve noticed many common attitudes that make retail investors different from institutional ones. For example, most of them, naturally, want to buy stocks that are cheap. Perhaps it’s a mentality carried over from all the stores constantly bombarding us with “Sale” and “Clearance” notices. No shopper in their right mind would ever pay full price for something so why pay full value for stocks?

Individual investors also like to take profits — a lot. That’s understandable. Five years of brutal equity market conditions, not to mention the worst recession since the Great Depression, make all kinds of investors nervous. But many investors are taking profits because it feels good to actually make money for a change. It helps to relieve those still-painful memories of 2008/2009.

Taking a profit of, say, 25% means, hey, you still have it — that ability to pick a winner. Who doesn’t like that feeling? However, feelings and the stock market don’t mix. Investors shouldn’t sell their winners unless there is a compelling, fundamental reason to do so. To feel better about the market is simply not a good enough reason.

Another thing investors need to better understand is dilution. Companies that issue stock willy-nilly on a regular basis should be avoided, or at least examined very closely before buying. Companies that hardly ever issue stock should be rewarded and maybe bought.

For example, we recently looked at two companies: Constellation Software Inc. and Yukon-Nevada Gold Corp. They couldn’t be more different. One is a software company and one is a gold producer. And the difference in share count is stunning.

According to Bloomberg data, Constellation in 2006 had 21.2 million shares. Yukon, meanwhile, had 58 million that year. Constellation’s share count is now exactly the same as in 2006. Yukon Nevada, well, not so much: It has 997 million shares outstanding. Constellation currently has a market value of about $2.4-billion; Yukon has a market value of $304-million. Investors need to understand that the more shares that are issued, the harder it is to make money.

Finally, and somewhat related to an earlier point, individual investors are still too worried about an impending collapse in the market. We’re not trying to dismiss any market risks here, but if you’re constantly looking over your shoulder worrying about an impending collapse, then you’re going to be missing potential opportunities right in front of you.

You are also going to trade too much, and may mistake a normal drop in a stock for something entirely much worse. You — potentially — could miss out on years, even decades, of decent returns and dividends.

Neither you, nor I, can predict what the next disaster will be, let alone the timing of it. Be careful, yes, and do your homework on individual companies. But don’t wrap yourself in protective bubble wrap and ignore the positives out there. There are some good things going on, believe it or not, but you need to be looking, not hiding.

Peter Hodson, CFA, is CEO of 5i Research Inc. a conflict-free independent investment research network.