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Started by : Kausik Panda, Sr. Associate, ICICI Securities   09 30 2008 06:55:56 +0000
Industry : Investment BankingFunctional Area : Movers & Shakers(Markets)
Activity:  129 views;  last activity : 07 06 2010 20:18:09 +0000

You either get excited (greed) or scared (fear) when you think of equity (shares/ mutual funds) as an investment product. When everyone here is investing for profit then why we loose money in stock market, what are your reasons for this

 
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1 2 3 4 5
1 Greed and Fear
2 Rear view mirror driving
3 Recession
4 Economic downturn
5 Following the crowd
6 this is not so
7 Controllable & Uncontrollable Factors
8 I loose money because ...

Greed and Fear

idea posted by Vipin Bhasin Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.

If we are talking about loose money by retail investors then there is only two reason for loosing money in stock market ; Greed and Fear ...

It is applicable not only for investors but also on those mediators who are doing advisory or trading for investors. I agree with most of our friends suggested here that nobody can earn profit in market but i want to ask only one question that if market will not give profits then what is the use of Insurances, MF, etc. who are earning from markets and provide profits to retail investors after deducting their amount. FIIs are earning high from Indian market from last few years..

The reasons are more expectations (Greed) because we assumed stock market as a highly profitable instrument which will provide us huge profits in few days only.. But if you are looking for very short term period then you wont invest your money in market go for F.D. or any other fixed earning financial gadgets. Because we know that shares of company will be more profitable according to company performance. There are so many example of shares and retail investor which were grown in market for a period of medium term.

Reason; In short term investment or day trader investor just watch the increasing price of share not the factors behind this.... it became speculation/gambling not investment. and even if their buying stock price rises they just wait for more increase IT IS GREED.. and after some time when the profit reverse in loss then they will come in Panic & sold their bought shares at lower price IT IS FEAR...

If you want make money in market then firstly go for medium to long term or a fixed % which you are looking for as a return on your investment with different time table.. Avoid ordinary news, go in deep/ background of company in which you are investing your money. Dividend, bonus background of company, ration analysis(if possible), 5 year plans of company.. means proper workout.. You will definitely earn as compare to any other financial investment instruments available in markets.

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Rear view mirror driving

idea posted by Arti Arora Branch Manager/Regional Manager, NII

Investors in general, and especially during a bull run, tend to look at the recent past pattern and assume that the future patterns will be identical to the past ones. This is as good as driving a car looking in to the rear view mirror.

A rear view mirror-driven car will not meet with an accident as long as the road ahead of the car is exactly as it is behind the car. This is rarely the case, both on roads as well as in the stock markets. But, when the stock market is on an upswing, the more investors tend to believe that it will keep going up forever.

They mistake probability for certainty. They pump in more money into the stock market and this always does not go into the right stocks.

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Ppl do think this is Speculation / satta, let them think like this , they say going for playing /khelne jaa rahe hai, these ppl intend to loos money.

Every day in our business we come across such situation, just trhink  "suppose you are manufacturing some part, say of stee, special type, you ask your broker to purchase that perticular type of stee , say ten tonns, you send him some money to justify your purchase, your broker tells you that item/steel is available at such price, you OK it and broker starts buying for you.

Say after two or three days your broker says that he has bought the steel for you at such price, you come to know that the price of that steel has gone up two to three rupees, you tell your broker to sell the material  in the market at the prevaling price, which ius two/three rupees up from your purchase price,your broker sells that steel in the market, deduct his commission and send you back your margin + the profit.

This is what we do in this market. we do trade. We dont do satta/speculation,. We enter at a perticular price and comne out at perticular price, but we are inprofit.

Loss & profit are part of business , any business, but in this market if you are entering as Trade not as speculator, chances are you will end up in profit.

If any one asks me, "aaj kya khilwa rahe ho/what speculation is for today", i simply ask them to go away, i do not have time.Because they will do mistake and loose money, you will be blamed.

Dear friends wether it is STOCK MARKET/ COMMODITY MARKET, HAVE PATIENCE, GOOD EQUITY TO HOLD THE POSITION AND LAST BUT NOT THE LEAST DISCIPLIN.

HAPPY TRADING.

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People loose money in Stok Market @90% and in Commodity Market 95%.

Three main pillers of this Trade

i] Equity

ii] Discipline

iii]Patience

If you have all these three with you , you will not loose money in these markets.

What normally ppl do/ask the trader "aaj kya hua"/"today what trade you did in my account", oh only one trade ? what about next trade?, I mean to say please trade with full Caution and Discipline, must have good equity with you to hold the position & dont go with the idea "Gold will go up so i want to buy Gold" this is wrong.You must have target WHERE TO ENTER IN THE MARKET AND WHEN TO COME OUT OF MARKET.DONT SEE WHAT OTHERS ARE DOING AND "NEVER TRY TO ENTER IN THE BOTTOM OR COME OUT AT THE HIGHT", GO WITH TECHNICAL ANALYSIS.

HAPPY TRADING 

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Recession

idea posted by Kausik Panda Sr. Associate, ICICI Securities
When there is recession the economy is not doing well. So the stocks of the company also start falling down. So we start loosing money. There is bear market.
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by varsha , Head/VP/GM-Quality, frac  | 02 22 2009 10:37:05 +0000

OBVIOUSLY RECESSION

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Economic downturn

idea posted by Venkatachalam C V Sr. Associate, JP MorganChase
If there is some change in economic policy and there is a liquidity crunch in the market, the market sentiments will go down and will indirectly affect the stock market. So there are enough chances of one loosing money.
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Following the crowd

idea posted by Esha Johar Risk Analyst, Irevna

I think some investors just follow blindly because they are unsure of what to do. So they  buy stock based on half-truths and rumors and end up losing a lot of money. And what Jinendra said is also true.

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this is not so

idea posted by Jinendra Jain PMS, Shree Siddha Securities

actually many took money making in stock market as gamble whereas it is investment also if they loose they by mouth publicity make share market a blunder

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Controllable & Uncontrollable Factors

idea posted by Raghunath C B Logistics Executive, AYOKI FABRICON PVT LTD

The Stock Market is very much volatile , it gets reflected by slightest of changes in political, economic , technological, cultural & Social Factors , these factors are uncontrollable in Nature . It Happens thats it , it shakes the the stocks top to down, losses in  due course of Such events is Inevitable . Like Recession , Inflations Etc. 

There are other factors which could be controlled to minimize the losses or Evade the losses , which are detected through a proper Fundamental & Technical Analysis of the Stocks .  The constant watch on the market is Necessary , the Investors awareness on the stock , the company , the industries is must to avoid the losses. Don't Treat it as a Gambling . Do it with prior researches & consultation of a Good Stock Broker .

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I loose money because ...

idea posted by Ashutosh Freelancer, Ashutosh Rai & Co.

1. My stupid clerk made Rs. 10 lahks in 5 years I will catchup with him in 6 months.

2. I know that my penny stock will be 10 times soon. They were 8 times already but now very low. I am sure that it will come up soon.

3. I get good tips from a friend of mine who have direct contacts with insiders.

4. I am highly qualified and know it all. I can not be wrong.

5. I have a new relationship manager. He is shown good returns already. 

6. If after investment the stock swings the wrong side, then you should average, you know common sense.

7. They markets are UP ... UP ... and ... Away! Those who invested in thousands have lakhs now and though who invested in lakhs have crores now!! You whould also rush with all you have.

8. Well all those who invested lost money as the markets are down. Stay away! You don't know who far down they can go...

9. I never saw any one making money through stocks, do you know anyone?

10. Fixed deposit with nationalised bank is the best way to invest.

I have more reasons for my losses but are you interested ?

Regards,

Ashutosh Rai

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