is this stock mkt for the retail investor? 3of 3

'Pundits' who advise all to make value long term investments when asked about the recent crash that wiped out long gains responded by coining another term for it...' a lost decade'. Well, you would feel the meaning of this term truely only if you were planning retirement and suddenly you see your investment built over a life time just wiped out into thin air.

As my concluding post in the series let me summarise why i think retail investing is a goner:
1. Apparent end of the long term investing approach in favour of active trading thus tilting the balance of effort return ratio unfavourably for a retail investor

2. Emergence of giant sized hedge funds and money managers with huge sway on stocks and direction of the market

3. Creation of a plethora of new complex financial instruments making the game more difficult and for the knowledgeable few

As somebody wanting to make money from a rising market wouldn't it be much simpler then to hand over your money to one of these savvy money managers? I certainly am tending to believe so. (Except you might want to do some research in choosing one wisely!!)

The only charm in retail investing left is now quiet akin to gambling and picking out the winning horses. You get a rush, a sense of having been proven right. But just like gambling that victory ain't gonna last long.

So go into retail investing directly knowing that you are making a gamble, play it like a sport, play it only with surplus cash and know when to say adios amigos.

is this stock mkt for the retail investor? 2of 3

i have always been inquisitive and i like to do deep dives in my areas of interest...tht's exactly how i got involved with stocks and in trying to understand abt how the markets work. assuming u r better than me ( and that's easy), u would be able to pick up the knowledge much faster and get ready to go...but the continuing point i'm trying to make from the first part in this blog is....IS IT WORTH IT? is the effort-return ratio favourable?

i feel that the stock market game changed forever with the emergence of mega size hedge funds and wealth managers, with their having created new instruments in derivatives like futures and options ( The Economist referred to the emergence of these as " an alphabetical soup of new instruments". Warren Buffet called derivatives as "financial weapons of mass destruction"). like all 'pundits', the hedge funds and money managers have sought to write in 'sanskrit' wht could be explained in simple english and create a select club in the process. they have thus not only increased the complexity of the game vastly, they have overtime garnered the muscle to move the market their way, interpret the stocks their way and force them up or down in the direction best suited to their positions.

there is even talk of some investment banks having become as powerful as the 'illuminati' or the 'church' with ability to affect not only the markets but the surrounding environment of main street business, politics and the media.

come back to the retail investor now; even if he does pick up genuine winners but the 'pundits' dont like 'em, they can just beat the stock down ignoring its winning qualities till everyone looking at their fall believes them to be no good too. and though each share holder is supposed to have a say, does a retail investor have any genuine ability to choose the management of the company or advise them in any way?

where lies the joy of investing for a retail investor then? to be contd...

is this stock mkt for the retail investor? 1of 3

i have read several stories of 'investment gurus' who started investing with pocket change .... have become millionaires and of course 'gurus' in the process. but is it possible to do so in today's day and age?

if at all tht is possible, do u simply follow the guru-speak and the strategies they used? Warren Buffet has always spoken of long term value investing whereby you choose good securities (how do u do tht? )and then stay invested in them over the long term. most gurus tend to agree on this as the best way to make money in the market. but is this strategy workable now or have the rules of the game changed dramatically? i say this cos' the recent secular tumble down of the global stock markets show that if u had invested in the top index stocks in US or India or Europe 10years ago and stayed invested throughout then your total investment gains today will be........................................................................................................................ZILCH if not NEGATIVE.
so if tht does not work no more, your other option is what is called trading. now again if u choose good securities which are priced right according to you in the present (again, how do u do that? wait some more ...), you have now the added problem of when to sell, at what percentage gain or when to walk away and take a loss... AND HOW DO U DO DECIDE THT??... hence the game only gets more complex....

of course, trading means tht u have to devote far greater time looking at the market and its gyrations and decide how often you want to get in and cash out...

and to answer all the HOW DO U DO THTs...well it is again more investment of time and hard work in terms of research and in knowledge of the fundamentals and technicals, understanding the P/E ratio, the support and resistance levels, the 200 day moving average, MACD and so on and so forth....

so as a retail investor r u upto it...............to be contd.