Why trading actively in stockmarket is pointless

General
1

(This is not some bear market post, infact my analysis is based on numbers)
After 5 years of studying, investing, research & analysis (and little bit of trading).
I came to conclusion that, anything to do with stock market is not worth the time.

=> All bigwigs earning big bucks, do so because of their connections or insider info or just their name. the notion of ‘you can earn crores if you just do what rakesh/dolly did’ is not true.

=> Too many scams, For a common man like me, Its easy to get scammed by TV Channels, Youtube channels, Blog writers, brokerage houses, twitter traders, rather than finding right company at right price.

=> Its mostly luck, I never understood the saying ‘Everyone is a genius in bull market’ until the bear market started. every analyst i followed and made money of, were turned out to be just lucky and not some sort of genius.

=> Not worth the time, I started calculating my returns based on amount of time i spend in analysis and this was a game changer for me. My job is far more worth if I convert it into pay per hour spent. The amount of time I need to spend to just keep up with news/announcements from company, changing macro economic conditions is mind boggling and severely diminished my returns.

What am i doing ?

Spending my time wisely, Since last year, I diverted all my attention to building new skills that help my career.
This helped increase my income by 30%. equivalent to my last 5 year return in stock market.

Abandon Active investing, Cut my stock market investment by half and move the remaining half to index funds.

Invest in alternative inflationary proof schemes, Commercial real estate investments with friends. This is not for everyone, but one of the best inflationary proof options I found. just like stock market, a lot of market research goes into a decision on where to buy, how much to buy. but you do research once and review yearly. no need to bang head every day.

Since the day i realized, i will never be able to compete with folks working full time analysts, my mental health is lot better and my bank a/c heavier.

Hope my experience helps. :slight_smile:

7 Likes
2

There are many ways you can make money in the market.

Your experience has been this, looks like you did not find your way, and you are doing other things, good :+1:

1 Like
3

Thanks.
What i noticed from fellow investors is, they get emotionally involved and resort to revenge trading or bag holding.

Thats when I realized, you have to cold calculative when it comes to investing your money AND investing your time.
Hence changed my style.

Sharing here because i know a lot of people are in my state.

Nobody should even think of stock market unless their NW is >1 crore.
For everyone else, focus on improving income by changing jobs or acquiring new skills, that would be more rewarding than looking at stock market everyday.

2 Likes
4

Such a clickbait of a title!

I continued reading hoping you’d share some here!!

Sounds like stock market investing to me!!!

Does the market behave differently if you ‘invest’ with above a certain capital?

Ending it here!!!:slightly_smiling_face::slightly_smiling_face:

1 Like
5

Thanks for your interest.

“infact my analysis is based on numbers”

I can go into some details to convey what i mean.
most of the stock market investors (colleagues, relatives, friends, people i met in forum), have less than 5lacs of capital and are average people at best. bring emotions with their cash.
They end up either picking blue chip stocks (big corps) or news/momentum based (news announcement).
Even if they end making money (after averaging out), i noticed the best investor is around ~25% and the worst bag holder is around -45%.
My experience was also in similar range. my portfolio swung from +30% to -25%.
I learned a lot about psychology of money handling. (ex: riding the winners, cutting losses, avoiding falling knives, avoiding FOMO, emulating portfolio of successful investors (dolly, jhunjhun) at small scale.
After all the work, i realized 30%, is too less without compounding benefit, the 30% return sounded very small.
I benefitted immensely from learning psychology of humans itself rather than making money.

May be if I continued investing, i would land a 10x bagger or 100x bagger. But i am very confident at this moment that, the probability of me buying a crappy smallcap is way higher than buying 10x bagger.

“Sounds like stock market investing to me!!!”

You are right, i still have some money in stocks, most of it are in NPS & passive index funds, which are pretty much no brainer. I spend less than 2 hours per year to manage my stock market investments now.
It used to be 600 hours per year. :slight_smile:

“Does the market behave differently if you ‘invest’ with above a certain capital?”

It doesn’t. but it makes your time worthwhile.
As from my examples above, if i have a capital of 5lacs and i am sepnding 1-2 hours per day monitoring it only to get 30-50% returns for 5 years. is it efficient use of my time?
I could easily pick a freelance gig or weekend work to earn more than the 30-50% i am making from stock market today ?
My EPF beat my own stock market investments by 5% without me spending any effort. that was my breaking point.
if your capital is more than 1 crore, your time might be worthwhile.

4 Likes
6

While it’s true that capital is required to make big bucks from stock market, but if you haven’t honed your skills on a smaller capital, then don’t even bother coming up with a big capital, market demands sweat equity and a bit of luck. Luck part is not in our hands, and even investing in real estate comes with luck, there is no gurauntee that price will go up in future just because they have in the past. Realestate was down for almost 7-8 years before covid boom kicked in. So this is the nature of investing and is not unique to stock market. But you maybe right in ditching stock market as it is not for the majority of individuals especially the trading part, best bet is index funds, they generally tend to outperform other asset classes in long term.

3 Likes
7

I agree, most people are better off focusing on their career rather than wasting time in the markets. Most people, but not all.

Just investing in diversified Equity funds / debt funds should be enough and some might diversify into gold and such. And hold for long long term and don’t hurt your self in ups and downs of the market.

yeah, but looking at these things are not necessary. I make good money from markets ( atleast so far), i have no use for these.

There is luck and there is skill. Both affect us, luck is dominant initially and with time skill/edge takes over. What i mean is even for person with skill, from any point of time, it can take time and multiple bets before law of large numbers works out. And ofc, no guarantee that it will work.

Completely agree that for most this not worth it. But at the same time, we don’t need these things. Simple things can work. Adding complexity without benefit is a waste of time.

Yes for small capital like this, trading/investing can only be a part time activity, where you are building/proving skills today in hopes of managing much larger capital tomorrow by earning elsewhere. Else even very high returns will only give you peanuts. You need minimum 10-20 times that + compounding for multiple years to make it worthwhile and gain some financial freedom.

2 Likes
8

its because you have a decent enough job that you feel stock market is not game enough !

i personally did not have a regular job nor safe income - thats why i felt trading is the best job out there !

1 Like
9

“…haven’t honed your skills…”
I used to believe the same, but my data & observations counter this claim.
You can’t beat army of full time analysts, insiders, CA’s who hide skeletons in balance sheets, taxes.

“…Realestate was down for almost 7-8 years…” depends on where you bought, what is risk aversion, initial capital.
In a way, realestate is like mini stock market. people who know where SEZ/RingRoad (aka insiders) make more money than normal RE investors and there are kabza/fake paper issues. But these are well understood and common man has tools to deal with these. But on an average, RE gives more returns for the amount of effort put in. Also, RE is very inflationary proof.

Effortwise, Index funds is the only class of funds that made sense.

  1. not much effort
  2. diversified
  3. low cost
  4. even if one company goes boom, you are still protected indirectly (ex: Meta & Netflix went down 50%, S&P500 is still at sane levels)
1 Like
10

If you dont have a stable job nor safe income, shouldn’t securing be your no.1 priority?
I talked about investing, but somebody edited my title’s post to trading.

my lessons apply to tradnig as well.
Too much effort & stress, too little return.

1 Like
11

“yeah, but looking at these things are not necessary. I make good money from markets ( atleast so far), i have no use for these.”

Then the above comment is not for you :slight_smile:
a lot of people follow these and think these mediums are genuine, because they talk very confidently. bring people onto their channels and talk technical mumbo jumbo and average folks dont know what is good, what is not.

“… multiple bets before law of large numbers works out…”
As i said before, before it works out, people run out of capital. i dont believe in this theory that, “if you persist, you will succeed” mindset. the quote applies to business in general, but not for stock market.

“…Simple things can work. Adding complexity without benefit is a waste of time…”
Agree, only index funds make sense. if a investor feels risky, invest in small cap funds. otherwise stay away.

3 Likes
12

Trading is just like doing a business. It is not pointless.

3 Likes
13

Trading is a business which requires skills and roi can be ranging from 10% to sky is the limit. To take it full time you need large capital to make it worth your time otherwise there are better avenues.

1 Like
14

trading is my full time job now :blush:

2 Likes
15

Just because it is not possible for you, doesn’t mean it’s impossible, plenty of people have made money from trading and the ratio of success is always the same no matter which endeavour ( less than 5%), also the thing you have said about real estate i.e where and when you bought is also applicable to stocks and index and when it comes to worthwhile effort , you think you can buy real estate with 5 lakh, capital is required in real estate as well, far more than stock market as diversification should be followed in real estate as well, and i know plenty of people who had bought flats in NCR and after 7-8 years the price are still the same. There is no guarantee of returns on real estate. If this was the case every person would have invested in real estate only. There is a reason other asset classes exist. And the worthwhile point is something that every individual must decide for himself. We can’t judge anyone. It is worthwhile for me it may not be worthwhile for others.

3 Likes
16

sorry my point was about investing. it was edited to call it as trading.

1 Like
17

good for you, if it works for you.

18

Just my opinion.

The headline is misleading just like how media does it. But some of the points that he has mentioned are valid.
Even I am of the opinion that it’s difficult to outperform index consistently. There are active funds and passive mutual funds. Most of the active funds fail to beat passive funds over a period for 5 years. The time we spend on trying to outperform isn’t really worth it.
Let’s say you have a capital of 10 lakhs and you out perform the index by 5 percent. You still end up with only 50k extra. Is it worth your time?
If it’s index you don’t have to bother at all about news and events.
He also mentioned a capital of 1crore. May be then it makes sense because you will be making 5 lakh extra.
I have given this data before too. If I have around 20 clients filing ITR who trade in stock market, all of them are underperforming. I have myself suggested them to go for index funds.

Having said all of this, I am actively engaged in balancing my portfolio. But in the last 3 years from 0 percent niftybees in my overall portfolio I have reached to 30 percent of niftybees. Every time market hits all time high I book profit in stocks and move it to index.
Now is it worth the efforts? For me. Yes.
But I understand what the OP is trying to say. A lot of credit goes to the headline in creating all the confusion.

3 Likes
19

Yes if you risk too much and don’t understand how your system has done historically + dont give more space for future, then yes these things can happen. Most people probably don’t even have a tested system, have no risk control, are at mercy of their emotions and so they have set themselves up to fail. If you don’t work, you don’t get results.

You don’t learn coding or any other skill just by watching tv or reading books without applying and skill takes time. Markets make it even tougher because feedback is only over large sample and you have lots and lots of junk information out there.

Anyway, just know that trading profitably is possible. But most people cant get there because of multiple reasons including lack of appropriate work and waiting for proof.

Yes index is good for most, but if you can trade then its absolutely mediocre ( not even close in returns/max drawdown) atleast until your capital becomes too large to trade.

2 Likes
20

All respected members have already shared their valuable view,& agreed with most of them. Adding my view.
with low capital trading is useless, unless your focus is on learning & preparing yourself for trading with big capital.

Trading is a serious business, but most peoples do it as a gambling, & blame to market after losing. For success in any business, its highly needed to be expert & experienced ( even though we see many business fails.)

Whenever i faced loss,there was mainly 2 cause.
1.most of time, due to following news,TV experts, & views of other traders (this happened, when i entered in stock market),
2. Due to breaking rules.
Investing is index funds is very good idea & time saving, as fellow members already told it.
Real estate, is not fit for everyone.
My personal opinion is, If one have secure job, & potential to prove better in his sector, then he should avoid active market investing/trading & go with index funds.
To get good returns, one need, good knowledge, big experience,patience,luck, discipline.

1 Like