New investors may not know what a normal fee, offer or price move looks like. Fear and excitement can then push a decision, especially in a market with few listed companies and days without trades.
The ten mistakes
1. Investing money you may need soon
Putting rent money, school fees or a loan repayment into shares can force you to sell at a bad price when the bill comes due.
Invest only money you will not need for several years. Read how much should you invest before you start.
2. Having no emergency fund
Without savings you can reach easily, any surprise forces you to sell shares, whatever the price.
Build a cash cushion first and keep it somewhere you can withdraw it quickly.
3. Trying to time the market
Waiting for the perfect low to buy, or selling everything before a fall you expect, can leave you out of the market at the wrong time. Prices are hard to predict reliably, and waiting has a cost.
Decide your purpose and time horizon first. See trying to time the market.
4. Buying on hype
When a price jumps or everyone in a group talks about a company, it is tempting to buy. By the time you hear about the move, it may be over.
Write down why you want to own the company before you place an order.
5. Panic selling
Selling after a sharp fall can feel like a way to stop the pain. If the company is sound and the price recovers, the sale locks in a loss you might otherwise have avoided.
Ask whether anything has changed in the company and whether you need the money soon. See fear, greed and the crowd.
6. Putting everything in one share
One bad result, one regulatory change or one scandal can hurt badly if everything is in a single company.
Spread your money. Several banks do not provide the same spread of risk as several kinds of investment. See diversification with seven listed companies.
7. Judging by price, not value
The 50 birr share is not necessarily cheaper than the 500 birr share. You need to know how many shares exist and what each earns before judging the price.
Compare earnings, dividends and book value per share, along with the price of similar companies. Our guide on how to analyze an Ethiopian bank shows how.
8. Treating tips as research
A tip is someone else's opinion, and often comes from someone with an interest in the price rising.
Ask for the reason, then check it in the company's own documents.
9. Ignoring costs and liquidity
Commissions, spreads and taxes reduce your return. In a thin market you may also be unable to sell when you want to.
Ask your provider for the full fee list, and read liquidity risk in a young market.
10. Skipping the licence check
An unsolicited offer or a promise of guaranteed returns calls for a licence check before any payment.
Check the licence with ECMA before you pay anyone. See how to spot investment scams.
What is different in Ethiopia right now
As of October 2026, seven companies are listed and six are banks, leaving little room to spread risk across industries. Trading is thin: the last price may be old, and selling a larger holding can move it. The ESX began trading in 2025, so statistics from older markets abroad may not apply here. Tips also travel through friends and messaging groups, where many scams start.
A calm checklist before every purchase
- Is this money I will not need for several years?
- Do I have an emergency fund outside the market?
- Do I understand how this company earns its money?
- Have I checked that my provider is licensed?
- Do I know the fees, and what the bid and ask are?
- Could I sell if I needed to, and at what price?
- What would make me sell, and what would show I was wrong?