Four important factors that retail investors often miss when chasing profits | Ashish Aggarwal

1
ashishaggarwal.com
Four important factors that retail investors
often miss when chasing profits
Ashish Aggarwal
2
Here Are Four Common Mistakes That Investors
Must Avoid
Stock market today Many investors are attracted
to bull markets. However, when choosing where to
invest in stocks, retail investors often miss
important factors. A look at the important
factors that retail investors often fail to
consider when deciding where to invest their
money in the stock market
3
1. The misconception surrounding the penny stocks
The misconception surrounding penny stocks
primarily revolves around the perception of them
being an easy route to quick wealth. Penny stocks
are often misunderstood as low-priced stocks that
have the potential to skyrocket in value, turning
small investments into significant gains in a
short period. However, the reality is quite
different ''Penny stocks lure investors with
get-rich-quick dreams, but fundamentals
ultimately determine fates. Rather than names
with tantalizing stories, seek companies with
solid leadership executing viable plans. Quality
large-caps like HDFC Bank, with proven
trajectories spanning decades, offer similar
breakout potential minus the uncertainty," said
Ashish Aggarwal, Director, Acube Ventures
4
2. Fear of Missing out (FOMO) factor
FOMO arises when investors witness others
benefiting from a specific investment and worry
about missing out on potential profits if they
don't act promptly. This fear can prompt
impulsive decisions driven by emotions rather
than thorough analysis. Investors might feel
compelled to enter the market or purchase a
particular stock merely because others are doing
so, without considering whether it fits their
investment objectives or risk tolerance. "While
money may have no memory, markets and stock
prices often do. Prudent investing means learning
from the past, not just chasing what's hot. Have
the wisdom to spot when that rockstar stock has
played its hit single and likely faces encores
sending crowds home. Timing matters. Don't let
fear of missing out goad you into "buying the
peak" as that hit fades. Remember, grounded
analysis guides which emerging instruments to
back as the next rising stars, well before
headlines trumpet their ascendance," said Ravi
Singhal, CEO, of GCL Broking.
5
3. Do not invest in a stock that is falling
sharply in price
Investing in a stock that is experiencing a sharp
price decline can be risky for several reasons.
When a stock is falling sharply, it may indicate
underlying issues within the company, such as
poor financial performance, management problems,
or adverse industry conditions. Buying into a
declining stock without fully understanding the
reasons behind the decline can lead to
significant losses. ''There may be a pot of gold
beneath red-soaked values screaming "buy," but
don't grab falling knives based solely on price.
Sharp selloffs typically indicate fundamental
fractures that further hacking reveals. Let
sinking shares find their true level first.
Discern if the axing reflects problems already
resolved or reveals deeper rot still spreading
before you risk bloodied returns. In stocks, just
as in relationships, character matters most,"
said Ashish Aggarwal, CEO, Space Mantra.
6
4. Long term perspective
Retail investors often get caught up in
short-term market trends and may forget about the
significance of long-term investing. Successful
investment demands patience and discipline to
weather market ups and downs and let investments
mature over time. Short-term trading tactics can
result in increased trading expenses and reduced
overall returns. By considering these critical
points, retail investors can make more informed
investment decisions and improve their overall
investment outcomes in the stock market. Read
more Interim Budget 2024 Heres the latest on
income tax slabs and rates for new and old tax
regimes Ashish Aggarwal