In the last decade and a half, there has been tremendous growth in solutions for retail investors. From absolute free brokerage to fully automated portfolio management. Innovation has come not in bits and pieces but in floods and tsunamis. 

Many of us have enjoyed the bull run over the last year and a half where some of us have even doubled our investments. Still, when we look at the long term, in the last decade, 90% of the retail investors have failed to make money from the stock market.

Here are 5 reasons why..

Influence

Our investment decisions are heavily influenced by a variety of factors and sources of information. We all have that stock expert friend or relative who follows the stock market as a hobby and we let them influence our decisions on where to invest. Will you really allow a hobbyist pharmacist to medicate you? I hope the answer is NO!. If not for our health, why do we trust stock market hobbyists with our wealth? Another very common place of influence is news channels. News will always talk about the events after they have unfolded. Have you ever seen the news channel be ahead of time? When the stock has already given a 100% move and past its major move, then it becomes newsworthy. And till then you have missed the bus.

Lack of understanding

We trust and get influenced by others as we do not have a complete understanding of the events and how to make those investment decisions, what if they go wrong? We then have no one else to blame and no choice but to accept the fact that we did not make an informed decision.

Seeking complexity

It is a given that how can something like a monetary system or stock market be easy. It has to be really complex and making money from it has to be really difficult. We need the extra edge to make money, the edge can be high computing power, insider information, complex mental models derived from the expert advice of bloggers. So we expect complexity and thus are unable to act on the simple ways to really invest and make money.

Over diversification

We have been bombarded with diversification, all our life. Apparently, everyone suggests everyone diversify. And in this process, over-diversifying eventually leads to our portfolio getting stagnant, even though we would’ve captured 3-4 multibaggers, why?

Because they amount to only 1-2% of the entire portfolio. How will that help you in any imaginable way possible to make your portfolio multifold?

Diversification is a myth!

Improper risk management

While some of us over diversify our portfolio, some of us go on randomly buying random stocks with no calculation as to how much to buy and how it would affect our overall portfolio. With no idea of how much downside one stock can have and some Tees Mar Khan’s of the stocks market go above and beyond to invest without actually putting a stop-loss in place. This leads to the portfolio being at risk of taking a hit and eventually retail investors losing money.

Cycle app helps you avoid the Influence, Lack of Understanding and complexity. By giving actionable and Insightful Buy Sell and Wait signals, along with stop loss for every buy signal across 3 countries and 10000+ stocks in India, USA and China

How much time and energy should I give to my investment management activity?

If we are in any job or business from which we earn our livelihood and save enough to invest in some assets for saving ourselves from inflation and building a nest egg for our families future, then I recommend that we must have a basic understanding of financial markets and select professional to handle our investment management activity, we must review the performance of professional appointed, but leave day to day work to him, if needed we can change the professional if we are not satisfied with the performance.

We don’t do our own surgery, we appoint well-qualified doctors for it, why?

Because doing surgery involves great painstaking study which we know we have not done and we can’t do.

Investing in stocks is easy, Right? Think again.

Doing investments in stocks from the surface doesn’t require much skill, you can open a brokerage account and buy any shares you have heard from your sources. You may face profit or loss in the short term with its kick of high or pain, both are harmful to you in the long term.

If you gain profits in your early trades, you become overconfident about the result, attribute it to your skills rather than market movements and you lose big in near future and quit the market for life.

If you lose in your early trades you quit the market for life,

Both outcomes are very bad for our future.

The best investment in our life is we

We must focus on our job and spend maximum possible time to upgrade ourselves in our vocation and enjoy free time with friends and family, pay a small fee to professional to manage your investment and save yourself from agony and loss of opportunity of markets, and save a lot of time, the return you will get on investment in yourself will far outperform your return from investment in time and energy you will spend to run your investments on day to day basis.