Business & Finance Wealth Building

Rising expectations of Investors

There were times when people used to buy share through IPO and keep locking a big pie of their income in these shares as savings for their retirements or ways to pass wealth across generations. They used to buy shares in paper form and keep the share certificate in bank lockers for the decades to come. Their money kept getting doubled and quadrupled.

But now, the market is in the age of demat accounts, day traders and lightening fast computerized trading, when the long term investors also have started keep their eye on the market regularly, and to them, the one to three years investment period also seems really very long. The industry cycles of growth and consolidations have also shortened, with market keep changing its game every month. The bull phase and bear phase of market has became just another fancy term with no relevance to the market reality, the market which some times blindly follow the global and Asian markets and other times dictates its own terms, spares no one and there are cases of rags to riches or the other way, making people feel they can double their money in virtually no time. The stock market is definitely giving returns much better than most of the other instruments but, they are not able to match the greed of of investors. They believe the money in hand has became so dearer that the returns of even one year investment has to cross 20% or even 30% to match the present value of any investment. Again, the relationship between risk and return is also on haywire. People want more predictability, they cannot even afford a 5% loss on some of their stocks.

This problem is much more severe in developing economies like India and China where the investment is not just for mere returns, its for meeting the ever growing needs of luxury and premium appliances. Unlike their western counterparts where people do financial and retirement planning, the investors in these developing markets want specific returns as soon as possible to realize their short term goals. This approach does not impose any harm to investors or the market, till the time they maintain sanity. But, if, in their hopes of more and more returns, they start using unhealthy practices of crossing their ethical boundaries, its unhealthy for the markets. Even otherwise, if they start buying highly speculative or penny stocks with the hopes of multi-bagger profits, its really unhealthy for the investors. These investors need to understand the fact that only very seasoned analysts or a properly maintained mutual fund can give returns better than the index.

As per the records of Indian stock picking community, Moneyvidya.com [http://www.moneyvidya.com] an amateur analyst beats the NSE index Nifty50 by only 3%. Now, this might not be a great motivator for an Investor to take all the pains of investing in stock market even though, the above site shares all recommendations for free.

All the above said reasons are responsible for keeping a huge section of society away from stock markets and causing them to miss out their share of the nation's high pace development. So, there is a huge vacuum in the demand and supply in stock market, creating an attractive entry point for foreigners to pool in their money and earn huge returns, and that's the primary reason for Indian stock market being ruled by FIIs. Because of this dependence of FIIs our market has became a puppet with its strings controlled by NASDAQ, FTSE and other indexes. Once the domestic retail investors become aware of this game and start investing in market, this correlation between global markets and Indian stocks will get sufficiently reduced.

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