The stock market has always been an intimidating place for retail investors, especially for those who are new to it. If you’ve been investing for a long time, you’ll be able to appreciate how easy it is to buy and sell stocks today. There are so many platforms, apps, and brokers out there who make buying and selling stocks seem as easy as ordering samosas online.
In a world of such convenience, there is almost an army of new, enthusiastic investors who wish to dabble in stocks. While the growing demand is great, the inexperience of new investors coupled with the ease of buying stocks that many veterans are concerned about. While analyzing and picking stocks is something best left to expert financial advisors, many are picking stocks themselves.
Why You Shouldn’t Pick Stocks Yourself
It was only yesterday that I was reading an article talking about how retail investors got trapped by investing in stocks based on momentum. People bought stocks of IndiaBulls Housing Finance, Hindustan Aeronautics, South Indian Bank, etc. Only to realize that the momentum was perhaps behind them. It’s nothing new. Those who cannot analyze stocks themselves often chase trends, big names, and rumors. Blinded by the lust for higher returns many forget that it is their hard-earned money that they are putting into these stocks.
The whole approach new investors have of trying to buy low and sell high makes for a slippery slope. Stocks should be picked based on multiple factors and with a fundamental analysis at the least. If you’re not thinking long-term this becomes even more crucial. How much would you pay for a cardboard box if you didn’t know what was inside it? No matter what number you’re thinking of here, the point is some people would pay more and those who would pay less for it. New retail investors buy stocks thinking it’s a great price to get it discounting the fact that there is someone who is selling it to them thinking that it’s a great time to exit. This nature of the market means that you need to dig a lot deeper than the basics of a company’s financial health.
What Changes If You Have A Stock Advisor?
The stock market is not a casino and even there, we know the house always wins. At the end of the day, you are participating in the economy and the market rewards you for it if you’ve invested in the right companies. To ensure that your hard-earned money is being put to the best use, you need someone who has the time and knowledge to analyze these stocks. Most of us are busy professionals who work from dawn to dusk. The time that’s left belongs to family, friends, and rest. This means to truly invest wisely you’d have to spend time studying stocks, understanding complicated graphs and ratios instead of watching your favorite show on Netflix.
While that might work for a small percentage of people, most of us really are better off leaving this to an expert. The difference is huge not just in terms of the returns but also in terms of the peace of mind it brings. As the founder of Cube Wealth, I’ve personally seen how people’s lives have been impacted after signing up for our Indian Equity Advisory service. The importance of a stock advisor is felt, even more, when it comes to US & Global stocks.
Today a lot of Indian investors are investing in stocks of companies like Apple, Amazon, Google, Facebook & Tesla among others. To help investors pick the right global stocks & ETFs Cube has even tied up with award-winning US-based advisor, Rick Holbrook. It’s still plausible for a small percentage of savvy retail investors to track Indian markets by investing both time and money doing so for international stocks is much harder.
All things considered, the chances of losing money in stocks become substantially higher when new investors pick their stocks. Just like we’d leave heart surgery to a cardiac surgeon, we should leave the stock selection to proven, expert advisors who track the markets for a living. There are many performance-driven options here like Cube’s partner Purnartha that ensure investors don’t need to worry about paying for advice without earning healthy returns.
By Satyen Kothari, Founder & CEO, Cube Wealth