Market veteran Shyam Shekhar says that most DIY investors lose money because they prefer trading over investing; They blindly participate in the ‘IPO lottery’; And they sell the winning stocks while sticking with the losers. Shekhar said these are the three mistakes DIY investors mostly make and find themselves abandoned within two years of investing in stocks.
Shekhar, founder of iThought Advisory, said that with DIY investing comes great responsibility. Shekhar said that with each passing market cycle, the number of investors coming to the market as DIY investors is increasing exponentially. But many of them leave Dalal Street because of some mistakes.
First, he said, investors prefer trading over investing. “Nowadays, new investors only want to do options trading. In earlier times, they used to buy and sell on the same day i.e. intraday trade. Then, we also have people who buy today, sell tomorrow. Whatever form Yes, I have. Seen that most people lose money and leave the market. Usually the cycle doesn’t last for two years,” Shekhar said.
Another reason he thinks investors leave the market is the IPO lottery. “They play the IPO lottery. Everyone wants to subscribe to the IPO. They believe that this lottery will make them rich. How many people can really say that they have become rich by participating in the lottery regularly ?The IPO lottery is a place where most investors lose money and a few people gain,” Shekhar said.
Shekhar said that those who benefit are the ones who choose IPOs selectively and those who work hard to get rich are the ones who lose the most. “People who prefer IPOs usually get allotted in wrong companies,” he said.
The third mistake that DIY investors make is holding on to losers. Shekhar said that most investors sell their winners and hold on to their losers in the hope that someday the losing investment will turn positive. Many of them sold stocks earlier seeing a strong move later.
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