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Rediff.com  » Getahead » 6 sure ways to lose money

6 sure ways to lose money

By P V Subramanyam
June 20, 2015 09:36 IST
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And they all stem from over confidence!

Why do people lose money in the equity market? Well there are many and I have written a lot about this... a few more: 

1. I have seen people take contrarian positions while doing a trade: for e.g. going long on Tata Motors and going short on Tata Steel. The reason? Hoping that one of them will be right. This is funny because unless there is some very specific reason for taking such a view such pair trades normally hurt. So this guy who is a TRADER, calls himself an Investor and gets the community a poor name. 

2. You have very strong political views and you will be bullish because NDA is in power and you are a BJP supporter: this is bull****, but true. 

3. Your expenses increase 2x your increments. Then there is a leverage asset buying spree also! So money does not stay with you. 

4. Your SIP amount assumed that equity will give 18 per cent return. So far your return has been 12 per cent but you are hoping for a reversion to the mean. 

5. You are sure that the market will turn around so you are doing SIPs more aggressively. God bless you. 

6. You knew of course nothing would happen to you because you are generally healthy. However in one of your trips to London, the walk from the station to the taxi stand had too much of snow and it took a toll of your leg.

There are many more ways because of which people lose money but more on that later...

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P V Subramanyam