Thread by @rahul93shukla

As Nifty is at ATH, it wld be good tht we refresh our memories with an interesting topic. This thread will concentrate on few common mistakes tht are made by Retail Investors. Many might already be aware bt it’s always good to go back to drawing board😉
#StockMarketindia
#Nifty

Here we go;
1. Cloning Investments/Ideas of renowned investors or someone they follow or admire without doing self-due diligence (For more details on this topic, read separate thread on link below 👇)

https://twitter.com/rahul93shukla/status/1413969531807010816?s=20

2. Selling ur winners & adding on losers – Gen mindset amongst retail investors is tht stks trading at 52wk high is Expensive & stks trading at 52wk low is Cheap which may nt be always correct. They end up selling stks making high in their portfolios to avg out losers making lows

3. Not Knowing/following Stop Losses – Before u plan to take a trade/invt u should knw ur risk & be mindful of knowing SL to exit if things don’t go d way anticipated. Except for few situations like 2020 crash where all stks took a beating, retail investors shld adhere to SL set.

4. Lack of Diversification – Majority of retail investors lack proper diversification into various sectors. During bull mkt many go with the trend/flow and only during correction/bear mkt they realise that their portfolio lack diversification into diff sectors to safeguard (1/2)

them from drastic capital erosion. Its always good to have stocks from multiple sectors and not keeping it concentrated to one or couple of sectors. Return might get limited to an extent but it will help saving Capital during phases of extreme volatility and price erosion

5. Not having proper Position sizing – Many times retail investors get their pick right but when they look at return to overall portfolio size, they realise that the allocation was low than the ones which are underperforming. (1/2)

Along with diversification one should focus on having proper position sizing. I generally don’t invest more than 20% in one script but it’s on individuals to decide based on conviction on a particular stock and what works for them😊.

6. Leverage – During bull mkt when everything is up n running many starts invting on leverage i.e. with 100 Rs Cap buying stks worth 200/300 Rs bt when d music stops it might wipe out entire Cap w/o they realizing. So don’t leverage unless u are pro to know when will music stop

7. Lack of Patience–Those who hv only seen Bull run expect stks to rise as soon as they buy & set unrealistic exptn of making big. If it was so easy to make💸in stk mkts every1 wld hv opted to be in. Keeping realistic return exp helps u nt being impatient, allows invts to mature.

8. Trying to Time the Market - Always remember only 2 ppl can time the market perfectly! 1 – God, 2 – A liar, Most of us fall under others category i.e. we can’t time it. So, it’s good to buy a stock & increase allocation as conviction builds or Co delivers as expected. (1/2)

“Time In Market Is More Imp Than Timing The Market Itself”

9. Buying based on Tip – Buying simply based on someone’s Tip or Advise is injurious to wealth & health😉. It doesn’t really work bcz every1 has diff risk profile, timeframe & conviction. You may rely on a tip to start making own due diligence & not just blindly follow the same!

10. Falling in love with Stock – Many a times we as retail investors ignore very obvious & apparent emerging red flags, fin deteriorate as our mindset is giving too much imp to a stk rather than invt thesis y we bought & execution/delivery of good financial perf by the Co itself

Conclusion – Mistakes are part of investing process bt if u knw mistakes beforehand u might end up making less & avoid a few. So, if u try to avoid these mistakes as retail investors ur return on invts might improve a lot & will help u achieve ur fin goals sooner than others!

If u really liked the content – do like & share/RT for wider reach😊
Also, if u hv any feedback or pts to add feel free to comment on thread
Happy Investing!
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