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Investment Return Vs Investor Return – Why Investors Earn Below Average Returns?

Discussion in 'Technical Analysis' started by shabbir, Jul 14, 2018.

  1. shabbir

    shabbir Administrator Staff Member

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    The average retail investor isn't able to create wealth in the market despite markets doing so well. Why there is so much gap between investment return and investor return?

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  2. rcube1972

    rcube1972 Member

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    "Do you agree with my view of why Indian retail investors aren’t able to get the returns?"

    I won't get into your view, but i have some reservation about the question itself. Question is why retail investors aren't able to get returns. I think leaving out a few out there, others are not investors at all, they are traders. That's why they are not getting returns.
    I think i should elaborate.
    Buying shares of a company means investing in a business. An investor is supposed to understand the business model and also have a general understanding of the prospect of the company. If he is satisfied that the business has future ,he invests: say @ 10/- per share. Now the business does well and share price appreciates to 50/-. Why does he exit? What could be the reason for exit unless there is a paradigm shift in business policy or Government regulation that puts the business prospect to jeopardy?
    If he is entering at 10/- and exiting at 50/-, he is not a share holder of the business, he is just trading with the shares. Time frame does not matter. It may be intra-day, it may be weekly, monthly or yearly.
     
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  3. chaitanya_mella

    chaitanya_mella Contributor

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    While I agree to most of it, I do believe that one should book profits from time to time. Either sell some and get back your capital or sell and buyback at lower cost etc. I mean whichever way suits an individual.



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  4. abhijitupsc

    abhijitupsc Contributor

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    Really good article

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  5. k_singh

    k_singh Member

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    Very nicely explained with examples above topic.followers can benefit from your last experience.

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  6. shabbir

    shabbir Administrator Staff Member

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    Yes true fully. Exits at 50 is often based on his profit consideration and that is when he is trading. If he exits with a view that he will invest in new business is fine.
     
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  7. shabbir

    shabbir Administrator Staff Member

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    Thx :D