Often investors chase returns. And why not considering that the whole game is to maximise returns on one’s investment! A closer look at the way markets operate will reveal that the stock market game is not that straightforward and in reality it is much more complex that one can imagine. For stock market professionals, it is relatively easy to understand how the market operates. However, for majority of new investors and first-time investors the market can be a punishing ground since they enter into the fray with only half-baked knowledge. The concept of returns is easily understood by investors as it is intuitive and straightforward.
However, what investors practically struggle is to understand is the ‘risk’ component in equity portfolios. At times even seasoned investors do not pay attention to the risk component in equity investments. Faster and better investors understand that risk management in equity portfolio is as important as picking outperforming stocks and can lead to a better and durable experience while investing in equities. Says Aditya Sarda, who has been investing in the markets for over 15 years: “In my initial years I use to ignore the risk factor completely. I use to focus only on returns to take investment decisions.”
This story is from the October 26, 2020 edition of Dalal Street Investment Journal.
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This story is from the October 26, 2020 edition of Dalal Street Investment Journal.
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