SOME people liken invest to gambling you pick a game (market) you like, calculate the risks involved, put a bet (investment), and with a combination of luck and odds. You hope to walk away with a gain.

The truth is investing is actually a lot more complex, and perhaps why it's not called gambling is that, while factors such as economic circumstance some and global events (ie what so call luck) play a part, these risks can be managed or at least mitigated.

Investing really is all about odds. It is about figuring out how likely a stock, bond or other investment yield returns, by how much, and by when.

And despite claims to the contrary by some individuals, we do not have the benefit of a crystal ball to gaze at to reveal the future. So instead, we have to look at current - and past indicators -to help us predict the future.

Most importance principles when investing: The past performance of a company or investment is no guarantee of future results.

Some investors brush this statement off without realizing how often they break this particular principle. In fact, there is an industry term that is used to describe such behavior - performance chasing.

Some investors jump on the bandwagon whenever brokers or industry watchers start touting a hot new asset class or sector.

They dump huge amounts into this new-found love affair, only to come away disappointed with the returns, which can sometimes even be in negative territory.

Worse still some investors pull out current investments in order to help finance these new ones, and thus incur frictional expenses like commissions and fees, thus compounding the situation

When property boom there are some people making amazing sum of money by buying and "flipping" property. However, don't be fooled - there are also plenty of story of those who assumed that there are quick money to be made, but ended up instead begin unable to flip the million-dollar property which they had no intention of keeping in the first place.

In fact, history has often shown that in many cases, the best time to invest in a particular sector is after it has suffered some horrible industry trends.

So before you jump into that new investment you might to ask yourself some questions:

• Has this particular sector; industry, or stock experienced a sudden increase in price recently, and does this still make the investment attractive?
• Have the prospects for better earnings already been priced in?

• What makes you think the returns from this investment will be materially higher in the future than they are at the present tune?

Another very important question you have to ask yourself is, how well do you know the investment, sector or business you intend to invest in? As a general rule of thumb, you should only go into businesses you understand.

If you are thinking of buying into the stock of a property company then you should understand; the economics of the property sector. Based on the understanding of the sector, how far ahead can you forecast how profitable the company will be? How certain are you of that prediction?

So it really isn't good idea to just jump into a sector or investment because you're afraid that you're going to miss out if you don't.

A more recent and painful example are the Internet boom, which saw thousands of investors rushing to grab a piece of the pie.

Countless launches of new companies which had hit on the "next big Internet technology that would revolutionize the world".

Angel and seed investors surround with tales of how Internet would change the way we live our lives and plenty of companies make money. But today many investors have lost staggering sums of money.

The corollary to that is that there were also some stunning successes, and some very rich - and properly very retired - investors. So, there are risks and there are rewards, but don't be silly and jump into an investment just because everyone else is.

"If everyone decided to jump off a building, you also want to jump?