Everyday, we hear so many stories of stocks earning 5x, 10x returns. It is very easy for someone to think that they can also make a fortune in the equity stock market. With the rise of robinhood investors, everyone seems to be jumping in this pool of money. I have seen many courses and channels on Youtube that claim to have identified some multibagger stocks. While equity stock market is definitely an exciting arena, one should always conduct their due diligence before jumping in. I don’t want to stop you from becoming the next Harshad Mehta, but here are 5 reasons you should NOT invest in stock market.
1. It requires time
Like many of us would assume, stock market is NOT a magic wand that will double your money in 21 days. It requires a lot of understanding, research and analysis before you chose a stock. From my experience in the market, I can very well say it is impossible to trade in stock market as a sidekick job. It is a full time, highly demanding affair. If you think you can do it part time, you are heading towards a dead end. So, if you wish to become an intraday trader or a short term investor, give it your 100% or give it a miss.
2. It’s addictive
I still remember when I invested my first 10k in the market, I would open the Zerodha application at least 25 times in the trading hours. I know because my digital wellbeing dashboard told me so. Every second of free time I had, was being absorbed by stock market. Even worse, it didn’t even matter. I never wanted to sell my stocks in a short time, wasn’t hoping to buy more. So what was I doing on that app the entire day? No one knows. It took me at least 3 odd months with extreme measures of locking the application so that I could focus on my main job.
3. Risk Appetite
I would not say stock markets are risky, but one needs to gauge their risk appetite before kicking off. If you plan to remain lowkey and every loss keeps you awake at night, stay away! Stock markets can turn into a really volatile roller coaster at times. There are many applications that will ask you certain questions and do your risk profiling accordingly. Make sure to use them and then take a wise call on this.
4. Too Much Information
Stock markets are that domain of investing, which is suffering from infoxication. It is good to have articles, opinions, expert advices on a subject but stock market overdoes it. As a newbie, I found one channel asking me to sell a stock and another one asking me to buy it. So it is always better to do your research before believing every tom, dick and harry on the internet. Everyone has their own approach towards analyzing a stock and you cannot challenge them. The key is to devise your own strategy and check if others resonate with your stance or not.
5. Patience
They always say, don’t try to time the market but evaluate your time in the market. Patience is the key to invest in stock market. You should be able to distinguish market noise from the real value of the stock and stick to it. People often change their strategy midway to align with the short term results and tend to forget the very reason due to which they began at first. At times, market can really test your patience.
Conclusion:
As mentioned earlier, investing in stock market can be really invigorating. We will also find our parents asking us to avoid this route as it is perilous. However, risk is only a function of ignorance. If you conduct your research properly, sky is the limit for you in this domain. However, you need to evaluate if you are ready for the commitment it requires.
Until Next Time…
Patience is a key for sure, especially for investors and not traders. I’ve been interested in stocks and often read a lot about it. For instance, currently I’m trying to understand basics of technical analysis. Never knew this side of the world was interesting too!
It’s super engaging. I gave it a shot during inital lockdown but it’s a steep curve. If you are intersted in it, I would suggest that you use Varsity app by Zerodha. They try to make this process easy and fun.